Couche-Tard and Shell Firm Up Relations
LAVAL, Quebec -- In a deal reported first by CSNews yesterday, Alimentation Couche-Tard's U.S. subsidiary, Circle K, acquired 236 Shell-branded sites from Shell Oil Products US and its affiliate Motiva Enterprises LLC. As part of the agreement, 240 existing Circle K sites -- located in some of the same U.S. markets as the acquired stores -- will have their fuel offerings converted to the Shell brand. Due to a confidentiality agreement between both parties, the purchase price cannot be disclosed as of press time.
With the acquisition, Couche-Tard will add approximately 340 million gallons in motor fuel volume sales, $120 million in merchandise sales and contribute to the company's earnings annually. "We looked at these assets and we made an offer in the areas we were interested in," Richard Fortin, executive vice president and CFO told CSNews Online.
"Strategically, these acquisitions would be excellent additions to our current network, while entering into a new market [Denver] and would efficiently complement the network expansion plans," added Couche-Tard's senior vice-president, Western North America Brian Hannasch. "Consistent with our development strategy, we selected these sites based on the following criteria: prime locations, potential for growth, quality of people and the opportunity to expand our relationship with Shell Oil US."
The 236 sites acquired by Couche-Tard currently operate under the Shell banner and are located in six markets throughout the U.S. -- 22 stations in Baton Rouge; 71 in Denver; 16 in the greater Memphis area; 28 in Orlando; 46 in Southwest Florida and 53 in Tampa. Fortin told CSNews Online that the stations acquired are regular gas stations with c-stores, some of which have car washes.
Of the sites acquired, 175 are company-operated, 49 are operated by dealers and 12 currently have fuel supply agreements. Couche-Tard will continue to own 25 and lease 24 of the 49 dealer operated sites acquired and will supply motor fuel to those sites. The 12 sites that have motor fuel agreements will continue to have fuel supplied to them, but Couche-Tard has no control over the real-estate. Also as part of the agreements, Couche-Tard will buy the land and buildings for 200 of the locations.
The 175 company-operated sites will be rebranded to the Circle K banner and will continue to sell Shell fuel in accordance with supply agreements signed with Shell and Motiva. As soon as the transaction is closed, the sites will begin the rebranding process, Fortin said. "We do it very, very quickly to help on the merchandise side of business."
This acquisition marks the entry of Couche-Tard into the Denver market. Fortin said that Couche-Tard's presence in the Denver market will be successful and added, "We wanted to be there for many, many months … Shell and Circle K is a good combination. I think it's a given that the profitability of these sites, branded together, have terrific results."
The company plans to invest an aggregate of approximately $45 million over the next five years, of which $25 million will be invested within the first 18 months to either raise and rebuild or renovate the stores at such sites in accordance with Circle K standards. Fortin told CSNews Online that the revamp would include "new faces, fresh food offerings and inside decorations in order to improve foodservice sales in addition to the rest [of the renovations], but the main emphasis in on food sales."
Included in the arrangement is a fuel supply contract to provide Circle K stores Shell-branded fuel to stations in Baton Rouge, Denver, the greater Memphis area, Orlando, Tampa and southwest Florida. The convenience stores that receive fuels will go from direct to wholesale management and remain Circle K-branded while the fuel offering will become Shell-branded.
"This agreement gets Shell one step closer to our vision of becoming the best fuels retailer in the world," said Stu Crum, Shell's general manager of retail strategy and portfolio in the U.S. "Bringing together the No. 1 selling brand of gasoline in the U.S. with one of the country's most popular convenience store chains will strengthen our offer and help attract new customers. It will give shell customers easier access to a wider variety of premium convenience items and services."
The transaction is expected to close before the end of the year and is subject to standard regulatory approvals and closing conditions. Internal available cash dollars will be used for the transaction along with the Couche-Tard's revolving term credit facilities.
Alimentation Couche-Tard Inc. is the third largest convenience store operator and the second largest independent convenience store operator in North America. Its network is currently comprised of 5,205 convenience stores, 3,244 of which include motor fuel dispensing, in eight markets, including Canada and 23 states in the U.S. Nearly 38,000 people work for Couche-Tard through its retail convenience network and executive offices.
With the acquisition, Couche-Tard will add approximately 340 million gallons in motor fuel volume sales, $120 million in merchandise sales and contribute to the company's earnings annually. "We looked at these assets and we made an offer in the areas we were interested in," Richard Fortin, executive vice president and CFO told CSNews Online.
"Strategically, these acquisitions would be excellent additions to our current network, while entering into a new market [Denver] and would efficiently complement the network expansion plans," added Couche-Tard's senior vice-president, Western North America Brian Hannasch. "Consistent with our development strategy, we selected these sites based on the following criteria: prime locations, potential for growth, quality of people and the opportunity to expand our relationship with Shell Oil US."
The 236 sites acquired by Couche-Tard currently operate under the Shell banner and are located in six markets throughout the U.S. -- 22 stations in Baton Rouge; 71 in Denver; 16 in the greater Memphis area; 28 in Orlando; 46 in Southwest Florida and 53 in Tampa. Fortin told CSNews Online that the stations acquired are regular gas stations with c-stores, some of which have car washes.
Of the sites acquired, 175 are company-operated, 49 are operated by dealers and 12 currently have fuel supply agreements. Couche-Tard will continue to own 25 and lease 24 of the 49 dealer operated sites acquired and will supply motor fuel to those sites. The 12 sites that have motor fuel agreements will continue to have fuel supplied to them, but Couche-Tard has no control over the real-estate. Also as part of the agreements, Couche-Tard will buy the land and buildings for 200 of the locations.
The 175 company-operated sites will be rebranded to the Circle K banner and will continue to sell Shell fuel in accordance with supply agreements signed with Shell and Motiva. As soon as the transaction is closed, the sites will begin the rebranding process, Fortin said. "We do it very, very quickly to help on the merchandise side of business."
This acquisition marks the entry of Couche-Tard into the Denver market. Fortin said that Couche-Tard's presence in the Denver market will be successful and added, "We wanted to be there for many, many months … Shell and Circle K is a good combination. I think it's a given that the profitability of these sites, branded together, have terrific results."
The company plans to invest an aggregate of approximately $45 million over the next five years, of which $25 million will be invested within the first 18 months to either raise and rebuild or renovate the stores at such sites in accordance with Circle K standards. Fortin told CSNews Online that the revamp would include "new faces, fresh food offerings and inside decorations in order to improve foodservice sales in addition to the rest [of the renovations], but the main emphasis in on food sales."
Included in the arrangement is a fuel supply contract to provide Circle K stores Shell-branded fuel to stations in Baton Rouge, Denver, the greater Memphis area, Orlando, Tampa and southwest Florida. The convenience stores that receive fuels will go from direct to wholesale management and remain Circle K-branded while the fuel offering will become Shell-branded.
"This agreement gets Shell one step closer to our vision of becoming the best fuels retailer in the world," said Stu Crum, Shell's general manager of retail strategy and portfolio in the U.S. "Bringing together the No. 1 selling brand of gasoline in the U.S. with one of the country's most popular convenience store chains will strengthen our offer and help attract new customers. It will give shell customers easier access to a wider variety of premium convenience items and services."
The transaction is expected to close before the end of the year and is subject to standard regulatory approvals and closing conditions. Internal available cash dollars will be used for the transaction along with the Couche-Tard's revolving term credit facilities.
Alimentation Couche-Tard Inc. is the third largest convenience store operator and the second largest independent convenience store operator in North America. Its network is currently comprised of 5,205 convenience stores, 3,244 of which include motor fuel dispensing, in eight markets, including Canada and 23 states in the U.S. Nearly 38,000 people work for Couche-Tard through its retail convenience network and executive offices.