Couche-Tard Gets Passport to Europe
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.