Couche-Tard Sells CrossAmerica to Company Founder

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Couche-Tard Sells CrossAmerica to Company Founder

11/20/2019

ALLENTOWN, Pa. — Alimentation Couche-Tard Inc. sold its ownership interest in CrossAmerica Partners LP; however, the move will not affect the asset exchange pact between the two companies.

Couche-Tard reached the deal with investment entities controlled by Joe Topper, the founder of Allentown-based Cross America. Topper is a current member of the board directors of CrossAmerica's general partner.

The CrossAmerica interests sold consist of 100 percent of the general partner interest, 100 percent of the incentive distribution rights and approximately 7.5 million CrossAmerica limited partner units. The transaction's price tag was not disclosed.

According to CrossAmerica, Topper returns as chairman of the board of the company's general partner. In addition, the transaction does not involve any capital outlay by CrossAmerica nor change its capital structure.

"At this time, we anticipate maintaining our current distribution policy, distribution coverage and leverage ratio targets that have been outlined over the past few quarters," Topper said. "I am excited for the future of the partnership. In the coming weeks and months, I and the management team look forward to sharing in more detail with our unitholders our strategy and goals for CrossAmerica."

Laval, Quebec-based Couche-Tard acquired CrossAmerica's general partner, CrossAmerica GP LLC, as part of its acquisition of CST Brands Inc. in July 2017. That deal also gave Couche-Tard 100 percent of the incentive distribution rights in CrossAmerica, and approximately 6.9 million of CrossAmerica limited partner units.

The decision to sell its entire ownership interest came after a strategic review, according to Couche-Tard.

"The sale of our interest in CrossAmerica benefits both parties and allows each to focus on growing their core businesses. As we complete the remaining exchange of assets with CrossAmerica, we will continue to look for opportunities for future exchanges which create value for our shareholders and CrossAmerica's unitholders," said Brian Hannasch, president and CEO of Couche-Tard. 

Greenhill & Co. acted as the exclusive financial and strategic advisor to Couche-Tard on the transaction. Faegre Baker Daniels LLP acted as the legal advisor to Couche-Tard. Skadden, Arps, Slate, Meagher & Flom LLP acted as the legal advisor for the investment entities controlled by Joe Topper.

Asset Exchange Agreement

Couche-Tard and CrossAmerica also reached a pact for an additional asset exchange transaction between the two organizations. This new exchange includes a select portion of Couche-Tard's U.S. dealer business and CrossAmerica's ownership interest in CST Fuel Supply LP. Specifically:

  • Couche-Tard will transfer U.S. wholesale fuel supply contracts covering 387 sites and 45 fee and leasehold properties to CrossAmerica; and
  • CrossAmerica will transfer its 17.5-percent limited partner interest ownership in CST Fuel Supply LP to Couche-Tard.

Couche-Tard will retain its dealer sites in California and those operated through its RDK joint venture as well as other strategic fuel wholesale assets across different parts of the country.

The companies expect to close the exchange transaction in the calendar first quarter of 2020. It has been approved by the Conflicts Committee of the board of directors of CrossAmerica's general partner, which was advised by Evercore as its independent financial advisor and by Richards, Layton & Finger, P.A. as its independent legal counsel. 

It is the third and final tranche of the asset exchange agreement that was announced on Dec. 17, 2018. CrossAmerica said it anticipates continuing to explore opportunities for future exchanges with Couche-Tard that create value for Couche-Tard shareholders and CrossAmerica unitholders.

"The announcement of this most recent exchange of assets with Couche-Tard shows the tremendous growth opportunities for CrossAmerica and our ability to continue to increase value for our unitholders," Topper said.

Skadden, Arps, Slate, Meagher & Flom LLP acted as the legal advisor and Matrix Capital Markets Group Inc. acted as the financial advisor for the investment entities controlled by Joe Topper.