FTC: Couche-Tard Must Divest Stores for CST Merger
LAVAL, Quebec — The Federal Trade Commission (FTC) has given Alimentation Couche-Tard Inc. the go-ahead on its acquisition of CST Brands Inc., but not before divesting more than 70 properties.
The divesture order requires Couche-Tard to divest 70 retail fuel stations to Dallas-based fuels distributor Empire Petroleum Partners. The fuel stations are located in Arizona, Colorado, Florida, Georgia, Louisiana, New Mexico, Ohio and Texas.
According to the FTC, without a divestiture, Couche-Tard’s proposed $4.4 billion acquisition of CST Brands — which is expected to close on June 28 — would violate federal antitrust laws. The organization alleges that without a remedy, the merger would significantly increase market concentration for the retail sales of gasoline or diesel in each of the 70 local markets, resulting in a monopoly in 10 markets and reducing the number of competitors in the rest to two or three.
Without the divestiture, the FTC continued, the merger would allow the combined entity to raise prices unilaterally in markets where CST is Couche-Tard’s only or closest competitor, and increase the likelihood of coordinated effects in markets where three or two competitors would remain.
Under terms of the agreement, Couche-Tard has 75 days following the close of the acquisition, or 14 days after the FTC’s consent agreement becomes final, to divest the 70 retail stations.
Additionally, the proposed divestiture requires Couche-Tard to give Empire the option to buy one damaged site in Albany, Ga. If Empire declines, the agreement prohibits Couche-Tard from restricting the use of the property as a retail fuel station in any future sale for 10 years.
A 30-day public comment period is open now through July 26, after which the FTC will decide whether to make the proposed consent order final.
Couche-Tard Inc., parent of the global Circle K brand, announced on Aug. 21 it would acquire CST Brands for approximately $4.4 billion, pending shareholder approval and government regulatory approval in Canada and the United States. CST Brands stockholders approved the proposed acquisition in a Nov. 16 vote, as CSNews Online previously reported. Couche-Tard will, through its acquisition, also acquire CST's interest in CrossAmerica Partners LP and associated incentive distribution rights.
Laval-based Alimentation Couche-Tard operates convenience stores and retail fuel sites worldwide, including more than 4,700 in the United States.
Headquartered in San Antonio, CST employs more than 14,000 team members at more than 2,000 locations throughout the Southwestern United States, Georgia, Florida, New York and Eastern Canada. Its U.S. banners are Corner Stores, Nice N Easy Grocery Shoppes, and Flash Foods. In Canada, CST is the exclusive provider of Ultramar fuel and its Dépanneur du Coin and Corner Stores.