Couche-Tard Considers U.S. C-store Acquisition

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Couche-Tard Considers U.S. C-store Acquisition

07/10/2012

LAVAL, Quebec -- There is some "activity" regarding a future U.S. convenience store acquisition, Alain Bouchard, CEO of Alimentation Couche-Tard Inc., confirmed during the company's earnings conference call this afternoon.

According to the CEO, any U.S. acquisition in the near future would be for 100 stores or less, because he does not want to make a purchase that would lead to a downgrade of Couche-Tard's credit rating.

Bouchard stressed though that no acquisition was imminent.

"[T]here are many growth opportunities in North America," said Bouchard. "We have the team to pursue those opportunities. But we will remain cautious."

Media reports have linked Couche-Tard as a possible buyer of 4,900 Sunoco gas stations and c-stores possibly being sold by Energy Transfer Partners LP. However, Bouchard's comments make Couche-Tard an unlikely acquirer of those locations, unless it were to buy a small percentage of the stores.

Marathon Petroleum Corp. and Global Partners LP have also been named in media reports as potential acquirers of the Sunoco locations.

Couche-Tard's credit rating could change negatively if it were to soon make another acquisition following its purchase of Stavenger, Norway-based Statoil Fuel & Retail ASA.

"In terms of dollars, it was the most important acquisition in Couche-Tard's history," CEO Alain Bouchard said in regards to Statoil."We are acquiring a great company with high quality assets and people."

As for an update on the progress of the acquisition, Couche-Tard said the deal is closed and it only needs to "squeeze out" the approximate 1 percent of Statoil shares it doesn't already own. According to Bouchard, Couche-Tard is rapidly undergoing the squeeze-out process and it should be completed shortly.

Regarding its 2012 fiscal fourth quarter, Couche-Tard earned $117.8 million, an increase of 82 percent compared to its 2011 fourth quarter. The c-store chain cited merchandise and service sales, acquisitions, higher motor fuel margins and a pre-tax gain of $17 million related to the Statoil acquisition for the vastly increased net earnings.

Revenues came in at $6.1 billion, up $1.3 billion, (28 percent) vs. Couche-Tard's 2011 fiscal fourth quarter.

For the quarter ended April 29, Couche-Tard, parent of Circle K, earned $1.1 billion in U.S. merchandise and service revenues. That compares to $955.1 million in revenues during the same period last year.

Motor fuel profits in the United States jumped 45.5 percent to $164.8 million for Couche-Tard's latest quarter.

According to Bouchard, fresh food sales were another highlight, increasing by "double-digit" percentages in the past quarter and fiscal year.

As of April 29, Couche-Tard had 5,803 convenience stores, of which 4,539 are company operated.