Shareholders of Statoil, operator of 2,300 convenience stores, must approve the transaction, and Norwegian government regulatory approvals are also required. However, Statoil's board of directors already approved the all-cash offer, and the $2.8 billion price tag represents a more-than-50-percent increase compared to Statoil's closing price yesterday on the Oslo, Norway, stock market.
Raymond Paré, vice president and CFO of Canadian-based Couche-Tard, said during a conference call this morning that voting by Statoil shareholders should conclude in the next four weeks.
"We have been scoping out companies [to purchase] for quite some time," he said. "Statoil is a great company and we're very happy to announce this deal."
According to Couche-Tard, there are many reasons why it sought to purchase Statoil. One was to gain a foothold in Scandinavia, eastern Europe and central European countries, such as Russia and Poland, where Statoil has an increasing presence. Other reasons cited by Couche-Tard are Statoil's strong management team and a solid free cash flow that will significantly enhance Couche-Tard's bottom line.
In addition, Paré said during today's conference call that European countries provide higher gasoline margins vs. North America. Couche-Tard expects few changes to occur once the transaction is completed, as it wants to preserve the Stavanger, Norway-based company's "strong brand."
"We strongly believe that our all-cash [$2.8 billion] proposal is compelling for Statoil Fuel & Retail's shareholders as it offers them the opportunity to realize full and immediate value for their investment. Moving into Scandinavia and Europe is an important step in implementing Couche-Tard's growth strategy," said Alain Bouchard, president and CEO of Couche-Tard.
Bouchard added that Couche-Tard has great respect for Statoil. "Couche-Tard is the leader in the Canadian convenience store industry and the largest company-operated convenience store operator in North America. We have successfully completed numerous significant acquisitions and are confident that by working together with Statoil Fuel & Retail's management, we will be able to quickly and efficiently integrate our operations to form a stronger, more competitive player that can provide customers with the very best that our industry has to offer."
Birger Magnus, Statoil's chairman of the board, said Couche-Tard's offer was carefully reviewed and provides a considerable cash premium for investors. "We believe that Couche-Tard would represent a solid industrial owner and that the transaction could deliver interesting growth opportunities for the combined organization," stated Magnus.
Couche-Tard intends to use existing credit facilities and a new three-year, $3.2-billion acquisition credit facility to pay for the transaction. Once combined with Statoil, the future Couche-Tard is expected to have $35 billion in annual revenues.
Statoil was first listed on the Oslo Stock Exchange in 2010 after raising $802.7 million in an initial public offering. If the deal is completed, Statoil will retain 46 percent of the combined company.
Investors cheered the news, lifting Couche-Tard's Toronto Stock Exchange shares by more than 14 percent today.
Couche-Tard was advised by National Bank Financial UBS, Scotiabank, HSBC, Rabobank and Bank of Tokyo-Mitsubishi.