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Carrefour

Couche-Tard open to second chance to woo French food giant Carrefour, says CEO

CarrefourAlimentation Couche-Tard remains open to a second chance to consummate a union with Carrefour if the French government has a change of heart about its opposition.

But the company’s founder said it would look elsewhere in hopes of expanding and achieving its strategy to double its adjusted operating earnings by 2023.

“It would be interesting to have another string in our bow to do development and consolidation,” executive chairman Alain Bouchard told The Canadian Press in a video conference Monday.

Couche-Tard abandoned its potential $25-billion offer for Carrefour after French Finance Minister Bruno Le Maire told the Quebec businessman that he refused to let a potential takeover proceed because he felt the deal would put food security at stake.

Bouchard said he was surprised that Le Maire justified his opposition based on food security, even as the two sides were on the verge of a deal.

“This surprised us greatly because we weren’t going to move the stores,” he said, adding that COVID-19 hasn’t helped.

“The pandemic has made people withdraw into themselves and politicians have wanted to be careful. We didn’t expect it, but I understand.”

Screen Shot 2020-09-28 at 4.31.02 PMEarlier, chief executive Brian Hannasch told analysts that the Carrefour file may not be permanently closed.

“We like the transaction and we’d love to do the transaction. So if we got signals that the environment could change or would change from the French government or other key stakeholders, we’d love the opportunity to re-engage under the right conditions,” he said in a conference call.

For the time being, however, he said talks remain on ice with the two retailers instead examining the possibility of co-operating in areas such as fuel distribution. private label and joint purchasing.

This transaction, which would have been Couche-Tard’s largest acquisition, would have allowed it to become among the five largest retailers in the world, Hannasch said.

The convenience store operator has been evaluating its options for several years to grow its global business by moving into sectors such as grocery, dollar stores, fast food and travel-related food outlets.

“While looking at a grocery chain, we never wavered from our commitment to fuel that’s fundamental to our business,” he said in answer to investor concerns voiced by analysts.

As a retailer, first and foremost, Hannasch said retail channels are blurring at a fast pace as the landscape changes.

He said it looks at its core business and adjacent opportunities with its “eyes wide open that the world is changing and it’s going to take competitors with the right scale and the right culture and the right focus to win.”

Bouchard reminded analysts that the company has made bold moves in the past, including the purchase of Circle K in the U.S. and Statoil Fuel & Retail in Europe.

“Was I hoping our bold approach to Carrefour have turned out differently? Of course,” he said.

“Yet, I’m tremendously proud that Couche-Tard has the financial strength and acumen to make such an offer, proud that many more around the world understand and support the strong foundation and history of our company and proud that we showed an entrepreneurial spirit, all the while reaffirming our commitment to our core business and our double again strategy.”

Still, analyst Derek Dley of Canaccord Genuity lowered his target price for Couche-Tard shares to $46 from $53 because investors will view Carrefour as a strategic pivot for the company despite abandoning the deal.

“In our view, this announcement led to a sigh of relief among many investors, who, like us, questioned the rationale behind such a large transaction and a pivot into the highly competitive European grocery retail environment,” he wrote in a repot.

He said the Carrefour interest calls into question Couche-Tard’s longer-term strategy as its ambitions appear to shift to becoming a leading retailer rather than just a leading convenience store retailer.

“While we applaud this ambition, we certainly believe it caught the company’s investor base by surprise and changes the longer-term investment thesis for Couche-Tard.”


Unknown

Couche-Tard shares plunge as analysts question $25B offer for grocery chain Carrefour

Carrefour_logo.jpegAlimentation Couche-Tard’s $25-billion potential play for French-based grocery chain Carrefour SA got a thumbs down from its own investors and skeptical analysts.

The Quebec-based company’s shares plunged 10.5%, or $4.35 at $36.96 in midday trading on the Toronto Stock Exchange.

Analysts questioned the rationale for the non-binding takeover offer at a price of 20 euros per Carrefour share.

Peter Sklar of BMO Capital Markets said there’s “limited strategic rationale” for such an acquisition.

“We are skeptical that an acquisition of Carrefour by Couche-Tard or a combination of the two companies will come to fruition due to a number of considerations,” he wrote in a report.

A more compelling transaction, he said, would be to pursue Carrefour’s 7,700 global convenience stores.

Derek Dley of Canaccord Genuity called it a “questionable pivot.”

“We view the transaction as a bit of a headscratcher, as it would involve Couche-Tard partially departing from its core competencies of c-store and fuel retailing (which garner higher trading multiples) and instead venturing into the lower-multiple grocery business, which we believe would be viewed negatively by investors,” he wrote.

Dley added that the minimal geographic overlap and a challenging operating environment in France suggest that cost savings would be lower than Couche-Tard has realized in past transactions.

Still, the mostly cash transaction would be expected to add about 30% to his fiscal 2022 earnings estimate.

The acquisition would potentially be a good fit with Couche-Tard’s 2,700 stores in Europe, added Chris Li of Desjardins Capital Markets.

Carrefour’s convenience store account for about 10% of its US$9 billion in European revenues and US$500 million of EBITDA (earnings before interest, taxes, depreciation and amortization).

Couche-Tard could sell the grocery business but Li questions whether it makes sense to go through the trouble just to keep such a small share of the business.

“Based on Couche-Tard’s track record of walking away from deals that were either expensive or did not make strategic sense, we are confident this remains the case,” he added.

The lack of details about a potential transaction make it difficult to assess whether its historic financial discipline will be maintained despite its demonstrated willingness to “take bold steps to grow the company,” said Irene Nattel of RBC Dominion Securities.

She noted that retail operations are increasingly blurring with companies extending into adjacent businesses.

For example, Asda was purchased last October from Walmart by the consortium behind EG Group.

Couche-Tard said the terms of the proposal are under discussion and remain subject to diligence, but the consideration is expected to be in cash in large majority.

It cautioned that there can be no certainty at this stage if the talks will result in a deal.

Founded more than 60 years ago, Carrefour operates nearly 13,000 hypermarkets, supermarkets and convenience stores in France, Spain, Italy, Belgium, Poland, Romania, Brazil, Argentina and Taiwan.

About 48% of US$87 billion of revenues are in France, 30% elsewhere in Europe, 20% in Latin America and two% in Asia.

Carrefour has a market capitalization of US$15 billion compared with US$36 billion for Couche-Tard and an enterprise value of US$33 billion versus US$41 billion for the Canadian retailer.

Couche-Tard operates convenience stores mostly under the Circle K brand in Canada, the United States and Europe. It recently took steps to expand into Asia.

 


Carrefour_logo.jpeg

Couche-Tard makes $25B offer for French-based grocery chain Carrefour

Alimentation Couche-Tard Inc. has made a non-binding takeover offer for French-based grocery chain Carrefour SA worth about $25 billion.

The company confirmed it recently submitted a non-binding offer letter for a friendly deal at a price of 20 euros per Carrefour share.

Couche-Tard says the terms of the proposal are under discussion and remain subject to diligence, but the consideration is expected to be in cash in large majority.

It cautioned that there can be no certainty at this stage if the talks will result in a deal.

Founded more than 60 years ago, Carrefour operates nearly 13,000 hypermarkets, supermarkets and convenience stores in France, Spain, Italy, Belgium, Poland, Romania, Brazil, Argentina and Taiwan. The company released a simple statement in response to recent reports.

 

Screen Shot 2021-01-13 at 12.30.45 PM

Couche-Tard operates convenience stores mostly under the Circle K brand in Canada, the United States and Europe. It recently took steps to expand into Asia.


Hu_Chocolate

Mondelēz International acquires ‘well-being’ snacking company

Hu_ChocolateMondelēz International has acquired Hu Master Holdings, the parent company of Hu Products, which offers high-quality snacks, such as vegan chocolate bars, made from simple ingredients.

Mondelēz made a minority investment in Hu in  2019 through its innovations arm, SnackFutures. As part of the deal, it had  a right of first offer to acquire the U.S. company.

Hu comes from the phrase “Get Back to Human” and encapsulates the ethos behind the  purpose-led lifestyle brand with a devoted fan base. Founded in 2012 as a family business by Jason H. Karp and siblings Jordan Brown and Jessica (Brown) Karp, Hu started out as Hu Kitchen, a high-end restaurant and market in New York City that focused on foods with simple, real ingredients. The company went on to expand its award-winning vegan and paleo-friendly chocolate bars, becoming a category leader in premium chocolate in the United States, and, according to a press release, “one of the fastest-growing confectionery brands in the natural channel.”

Recently, Hu broadened its offerings to include premium, grain-free crackers and begun scaling its distribution across the U.S.

“Hu is a strong strategic complement to our snacking portfolio in North America,” Glen Walter, EVP & president, Mondelēz International North America, said in a statement. “This well-being brand platform provides further growth opportunities in chocolate, cross-category potential in crackers, as well as meaningful opportunities to expand distribution including in eCommerce and premium conventional retail. We’ve been very impressed with the Hu management team as a minority investor and look forward to working with Jordan Brown and Mark Ramadan and the rest of the Hu team to provide support and resources for the brand’s next chapter of growth.”

“Jordan, Jessica and I started Hu Kitchen because there was a need to trust and understand every ingredient in our food,” said Karp. “Eight years ago, we felt there was a need for delicious food that could change how you feel and compliment a healthier lifestyle. Mondelēz International has been our minority partner for almost two years, and we are excited to fully join their family of brands because we believe their resources, strengths and progressive vision can help us accelerate positive change within snacking and grow the Hu platform in a bigger and broader way.”

Joining other fast-growing premium and well-being snack brands, including Tate’s and Perfect Snacks, Hu will be part of the North American Ventures business model, but Mondelēz will operate is as a “separate business to nurture its entrepreneurial spirit and maintain the authenticity of the brand and culture, while providing resources to help accelerate Hu’s growth. Hu will continue to produce all products at current manufacturing facilities.”

Hu senior leadership will receive a contingent payment based on future performance of the company. In 2019, Hu hired experienced entrepreneur Mark Ramadan, co-founder and former CEO of Sir Kensington’s, as CEO. During Ramadan’s tenure he has focused on enhancing the purpose and values of the company and set the pathway for continued sales growth.

The acquisition closed on January 4, 2021. Financial terms of the deal were not disclosed. Mondelēz International operates in more than 150 countries around the world and its portfolio includes, OREO, belVita and LU biscuits; Cadbury Dairy Milk, Milka and Toblerone chocolate; Sour Patch Kids candy and Trident gum.


Unknown

Couche-Tard completes Circle K Hong Kong acquisition

UnknownAlimentation Couche-Tard Inc. has closed its acquisition of Convenience Retail Asia (BVI) Limited (“Circle K HK”). The transaction, which was originally announced on November 4, 2020, was approved by the shareholders of Circle K HK’s parent company and all customary closing conditions have been completed.

Circle K HK operates a network of Circle K-licensed convenience stores, with 340 company-operated sites in Hong Kong and 33 franchised sites in Macau. In a statement, Couche-Tard said the acquisition represents a significant milestone “as it provides the company with a platform in Asia from which to launch its regional growth ambitions.”

Brian Hannasch, president and CEO of Couche-Tard, said: “Circle K Hong Kong is one of the best convenience store operators in Asia and will be an excellent fit within our company. We are pleased to have completed this transaction rapidly and are excited to work with our new teams to advance our growth strategy in the region.”

Circle K HK has the second largest market share in Hong Kong, one of the most economically developed markets in Asia and most densely populated regions in the world. For Couche-Tard, this represents “meaningful room to grow organically.”

In addition, Circle K HK has a strong loyalty program, with approximately 1.6 million “OK Stamp It” members, as well as an established private label program. In addition Circle K has advanced merchandising, technology and supply chain capabilities.


Story Distributing

Parkland announces U.S. acquisitions

Parkland Corporation has announced it has entered into a series of transactions to acquire the assets of two U.S.-based fuel distributors.
Story Distributing

Story Distributing operates Casey’s Corner c-stores

The company reported last week that it is working to acquire Story Distributing Company and its affiliates. Story is a well-established retail and commercial fuel business headquartered in Bozeman, Montana. This acquisition adds scale and density to Parkland’s existing Northern Tier Regional Operating Center (ROC) and expands its presence in the high-growth Montana and Idaho markets.

As well, Parkland announced that it is taking on Carter Oil Company, Inc. Carter is a wholesale and commercial fuel distributor based in Flagstaff, Arizona. This acquisition complements Parkland’s existing Utah and Arizona operations within the Rockies ROC and expands Parkland’s presence in the high-growth Northern Arizona region.
Altogether, these acquisitions add 13 company retail sites with strong non-fuel contribution and approximately 40 retail dealers, as well as commercial fuel and lubricant distribution capabilities to Parkland’s U.S. portfolio. The acquisitions are projected to add annual fuel and petroleum product volume of approximately 275 million litres to the company’s U.S. segment.
“We continue to build momentum in the US and advance our growth strategy,” said Doug Haugh, president of Parkland USA. “These acquisitions expand our presence in high-growth regions and provide additional opportunities to leverage our On the Run convenience store brand and increase our supply and distribution capabilities. We see an attractive pipeline of opportunities and are well-positioned for further growth.”
The Carter transaction is expected to close in the fourth quarter of 2020. The Story transaction is expected to close in early 2021.

Unknown

Mars to acquire KIND North America

UnknownThree years after taking a minority stake in the healthy snacking company, Mars Inc. has acquired KIND North America, with KIND to function as a “distinct and separate business within the Mars Family of Cos.”

Terms of the deal were not disclosed, however The News York Times, citing sources close to the matter, valued KIND at US$5-billion.

UnknownKIND North America will join KIND International to create one organization operating across 35 countries. The acquisition is the next step in the companies’ strategic partnership, which began three years ago to strengthen Mars’ reach and commitment to the growing healthy snacks category.

Founded in 2004, KIND has a family of more than 100 snacks that feature a nutrient-dense first ingredient (whole nuts, whole grains or whole fruit) and do not contain genetically engineered ingredients, sugar alcohols or artificial sweeteners.

“I am so proud of how well the Mars and KIND teams have complemented and strengthened each other over the past three years,” Daniel Lubetzky, KIND founder and executive chairman, said in a statement. “We are now well positioned to further advance our efforts and continue building a foremost health and wellness platform. As we said in 2017, Mars is a company that shares KIND’s passion for business as a force for good, and I am confident that together, we will be able to make our small contribution to make this world a little kinder.”

During its three-year partnership with Mars, KIND has expanded into more than 35 countries, including China, Germany and France, and into several news categories with the launched of new products, including KIND Bark, KIND Frozen Bars and KIND Smoothie Bowls.

“When we began this partnership, I said it was one built on mutual admiration and a shared vision for growth,” said Mars CEO Grant F. Reid. “After three years, you can see the impact, as together we have grown the healthy snacking category and brought KIND and the KIND Promise to 35 countries and into new categories. We’re delighted to continue to build on this success and welcome KIND North America into the Mars Family of Cos.”

Lubetzky will play a key role in the future development and expansion of KIND, while upholding the KIND Promise as the brand expands into new categories and geographies. Also, he will retain a financial stake in KIND, a majority of which was previously donated to charity to further his philanthropic efforts.

The KIND Promise is to build a kinder world one snack and one act at a time by being:

  • Kinder to our bodies: KIND will add more than 2 billion servings of nutrient dense foods to people’s diets by 2025.
  • Kinder to our planet: KIND will exclusively source 100% of its almonds from bee friendly farms by 2025.
  • Kinder to our communities: KIND will continue to break down barriers to create more inclusive and empathetic communities.

Founded in 2004, KIND has a family of more than 100 snacks. All of the company’s products lead with a nutrient-dense first ingredient such as whole nuts, whole grains or whole fruit, and do not contain genetically engineered ingredients, sugar alcohols or artificial sweeteners.

With US$40 billion in annual sales, McLean-based Mars has a diverse and expanding portfolio of confectionery, food, and petcare products and services, including recognizable brands: Dove, Extra, M&M’s, Milky Way, Snickers, Twix, Orbit, Pedigree, Royal Canin, Skittles, Ben’s Original, Whiskas, Cocoavia and 5.


Unknown

Alimentation Couche-Tard subsidiary acquires U.S.-based Pride c-store chain

UnknownColumbus-based Mac’s Convenience Stores LLC, a subsidiary of Laval, Quebec-based Alimentation Couche-Tard Inc., acquired Pride C-Stores Inc. Columbia City-based Pride C-Stores owned and operated seven convenience stores, according to Convenience Store News.

Pride C-Stores, which began as Parish Oil Co., acquired its first convenience store in 1977. In 1983, the company began a bulk fuels operation, serving local residential, agricultural and industrial customers.

It sold the bulk fuels business in 1988 as the company turned its attention to developing its c-store chain. All of the stores operate under the Pride brand and are within 25 miles of the Columbia City headquarters in and around the Fort Wayne metropolitan area.

The stores are located in Auburn, Churubusco, Columbia City, Fort Wayne, Kendallville, Merriam and Warsaw. The locations sell CITGO-branded fuel.

The average parcel size is approximately 1.2 acres, while the average building size is approximately 3,000 sq. ft. Two of the sites have car wash facilities, according to NRC Realty & Capital Advisors.

“We worked very hard to build a ‘best of class’ chain of convenience stores in northeastern Indiana and we have been proud to serve  our customers in these markets. We ultimately concluded for a number of reasons that it was the right time to sell,” said Richard “Rusty” Parish, president of Pride C-Stores.

“Although we faced some headwinds in getting this done, especially in the face of COVID-19, we were able to achieve our objectives, due in large part to the assistance we received  from our team of financial advisors at NRC Realty & Capital Advisors,” he added.

 

 


Unknown

Couche-Tard enters Asia with Hong Kong acquisition

UnknownAlimentation Couche-Tard Inc. has entered into an agreement to acquire all the issued and outstanding shares, on a fully diluted basis, of Convenience Retail Asia (BVI) Limited (Circle K HK) for HK$2.79 billion, or approximately $360 million.

Circle K HK operates a network of Circle K-licensed convenience stores, with 340 company-operated sites in Hong Kong and 33 franchised sites in Macau.

In a statement, the Canadian store giant said: “This transaction represents a significant milestone for Couche–Tard as it provides the Company with a platform in Asia from which to launch its regional growth ambitions.”

Circle K HK has the second largest market share in Hong Kong, one of the most economically developed markets in Asia and most densely populated regions in the world. For Couche-Tard, this represents “meaningful room to grow organically.”

In addition, Circle K HK has a strong loyalty program, with approximately 1.6 million “OK Stamp It” members, as well as an established private label program. In addition Circle K has advanced merchandising, technology and supply chain capabilities.

Couche-Tard says it “expects to benefit from Circle K HK’s experienced management team to gain access to further opportunities in the Asia-Pacific region, while also leveraging the team’s insight and knowledge of the high-density urban retail format.”

“I have followed Circle K Hong Kong’s progress closely for decades and deeply admire its leadership team and retail expertise,” said Alain Bouchard, founder and executive chairman of Couche-Tard’s Board of Directors. “I look forward to welcoming their team members and stores into the Couche-Tard family and have no doubt that together we can reach millions more customers in Hong Kongand across Asia as we move forward in our journey to become the world’s preferred destination for convenience and fuel.”

Brian Hannasch, president and CEO of Couche-Tard, added: “Circle K Hong Kong is one of the best convenience store operators in Asia and will be an excellent fit within our company. We are excited to partner further with their highly advanced team in terms of innovation, loyalty, private label, retail execution and ability to grow market share. Upon closing of this transaction, Couche–Tard will reach a milestone in its strategic ambition of entering the high growth Asia–Pacific market with a first-rate management and operations team, which has the credibility, experience and capabilities to support future expansion in the region.”

Victor Fung, chairman of CRA, called it a win-win for both companies: “Our investors will gain from a good return on their investment and Couche-Tard will benefit from a first-class organization of dedicated and loyal team members who have contributed to the success of Circle K in Hong Kong.”

 

Under the terms of the agreement, Couche-Tard will acquire Circle K HK on a cash-free and debt–free basis. The final purchase price will be subject to working capital and other balance sheet adjustments. The transaction is expected to close by December 31, 2020 and will be subject to usual closing conditions.


Ian White, Parkland

Parkland leaders discuss On the Run deal

UnknownCalgary-based Parkland Corporation will acquire the license for the exclusive use of the On the Run trademark in the majority of U.S. states. The deal includes an option to purchase the On the Run U.S. trademark together with the license owner’s On the Run franchise business. The acquisition positions Parkland to expand On the Run across the United States to create a unified, North American convenience store brand.

Parkland is a convenience/gas leader with more than 1,850 fueling sites in Canada featuring brands such as, Ultramar, Esso, Fas Gas Plus, Chevron, Pioneer and Race Trac. The company is also a major presence in the U.S and Caribbean markets. In the U.S., Parkland owns c-stores, supplies independently owned gas stations, delivers bulk fuels and supplies lubricants. U.S. brands include, Rhinehart Oil, Hart’s and Farstad Oil, as well as Superpumper, Kellerstrass Oil Company, KB Express, Mort Distributing, ConoMart Super Stores, and Tropic Oil. In the Caribbean, Parkland offers brands such as Esso, SOL and Shell at 496 locations in 23 countries.

On the Run is an international convenience retail brand developed by ExxonMobile in the U.S. Parkland Corporation took on the Canadian rights to use the brand in 2016 after Imperial Oil divested its retail network. Before Parkland’s licensing announcement, the company operated more than 300 On the Run sites at gas stations operating under various brands.  

Ian White, Parkland

Ian White, Parkland

According to Ian White, SVP, strategic marketing & innovation at Parkland, On the Run is an established retail brand that can be quickly and efficiently scaled by leveraging the capabilities already established in the Canadian market. He suggests that the time is right to create a unified North American retail and convenience store brand. He points to five strategic rationals for the decision.

  1. Create a unified North American convenience brand by expanding On the Run across the U.S.
  2. Capture efficiencies through common brand collateral, product assortments, private label product ranges and operational continuity.
  3. Opportunity to rebrand existing U.S. convenience stores and efficiently incorporate the On the Run convenience brand to newly developed sites.
  4. Greater optionality and a strong convenience store foundation for future U.S. merger and acquisition activities.
  5. Support the organic growth of the dealer business by providing an enhanced, bundled offer that combines a leading convenience store brand with multiple forecourt fuel brands.

parklandontheruncanadainteriorphoto

Doug Haugh, president, Parkland USA, tells OCTANE  that the initiative builds on successes in brand image, private-label goods and product assortment already established in the Canadian market. “Our U.S. customers will enjoy an enhanced interior and exterior rebranding elements,” he says, noting larger and brighter canopies and a variety of new product offerings coming to locations soon.