Couche-Tard Acknowledges ‘It is in Discussions’

LAVAL, Quebec — Alimentation Couche-Tard Inc. acknowledged “it is in discussions with third parties regarding possible business transactions.”

The parent of Circle K issued a statement at the request of the Toronto Stock Exchange, where the company’s shares are traded.

As CSNews Online previously reported, Couche-Tard is expected to enter the winning bid for the acquisition of CST Brands Inc., operator of approximately 2,000 convenience stores in Texas, the Southeast, upstate New York and eastern Canada. An announcement could be made as early as this week, according to media reports. 

In its statement issued Aug. 16, Couche-Tard did not mention CST Brands by name. “No formal agreements have been reached,” read the statement. “There is no assurance that transactions will result from any of these discussions. Should agreements be reached, Couche-Tard will promptly disclose the information as required.”

The Laval-based company also reiterated remarks it's made during prior earnings calls that it will “maintain its disciplined approach to acquisition opportunities to create value for its shareholders.”

As of Wednesday afternoon, CST Brands was valued at $3.55 billion, or $47 per share. If the acquisition is consummated, the purchase price would likely be higher than this figure, with Wall Street analysts believing CST Brands will be purchased for anywhere between $50 to $56 per share.

In recent months, Couche-Tard, Marathon Petroleum Corp. division Speedway LLC, Sunoco LP, OXXO Mexico, 7-Eleven Inc. parent company Seven & i Holdings Co. Ltd. and multiple private-equity firms have all been rumored to be interested in acquiring San Antonio-based CST Brands.

Two venture capital firms that own shares in CST Brands, JCP Investment Management LLC and Engine Capital LP, have criticized the retailer for poor merchandise sales. These activists' efforts led CST to appoint convenience store industry veterans Tad Dickson and Rocky Dewbre to its board of directors and undertake an “exploration of strategic alternatives to further enhance shareholder value.” 

This review already led CST to shed some underperforming assets, including 79 convenience stores in California and Wyoming, which the company sold to 7-Eleven.