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Couche-Tard’s new initiatives designed to meet rising customer expectations

Screen Shot 2019-09-10 at 11.04.38 AMAs Alimentation Couche-Tard Inc. has built up its Circle K footprint through a series of global acquisitions, the company has begun rolling out several in-store initiatives to meet its customers’ rising expectations.

Chief among those have been foodservice-related programs, such as the company’s coffee platform and hot dog offer — both of which have spelled success for the Laval-based parent company of Circle K. Additionally, in the past few quarters, Couche-Tard began upping the ante with new digital and loyalty solutions, including its Lift upselling program and recently launched Easy Pay rewards program.

“I’m pleased with the work leveraging our loyalty programs, like Lift and Easy Pay, and unique promotional activity and gamification across the network — all part of our global efforts to drive more traffic to our stores and make our customers’ lives just a little bit easier every day,” Couche-Tard president and CEO Brian Hannasch said during an earnings call last week for the company’s first-quarter fiscal year 2020.

Circle K’s Easy Pay program rolled out to all of its U.S. network, with the exception of Holiday Stationstores, during the latest quarter. The retailer expects to complete the rollout at the Holiday locations in the fourth quarter.

Hannasch reported that the company is pleased with the pilot tests of the program, but it is too early to assess the national rollout. The retailer will be testing a variety of discount levels, as well as store-level incentives, to understand how to maximize traffic and penetration, he explained.

As for Lift, the in-store upsell tool, it was in almost 5,750 of the company’s U.S. convenience stores by the end of the quarter, and is beginning to hit sites in Canada.

“We think with both of these, we are just beginning to scratch the service,” Hannasch said. “With regards to Lift, we are pleased with the early results and we are seeing a very good conversion rate — averaging over 8 percent of customer transactions incorporating some sort of Lift promotion.”

To extend its reach, the retailer is piloting home delivery in Texas with service from more than 160 stores in the Houston area. Customers can order a variety of items, including snacks, beverages and age-restricted items, and receive them in less than an hour.

“We are monitoring this closely to measure customer acceptance and how it can play out in other markets,” Hannasch said, adding that the company will pilot the service in different geographies with different partners in the coming quarters.

IN-STORE INITIATIVES

Inside the store, Couche-Tard continues to grow its offerings.

On the foodservice side, the retailer’s coffee-program expansion continues, with more than 9,000 coffee machines installed in almost 4,000 locations in the United States this year.

“We continue to see strong sales and margin results, and customer feedback has been extremely positive,” Hannasch said, noting that full installation is on track to be completed by the end of calendar year 2019. “It’s a great example of when we test, we find something that works and scale it rapidly.”

Packaged beverages remain an especially strong category, with energy drinks, water and ready-to-drink-coffee contributing notably to same-store sales growth.

Couche-Tard is also seeing emerging growth in the alcohol space with alternative products such as hard seltzers, reflecting changes in consumer behavior.

“We are committed to staying ahead of the curve,” the chief executive explained.

In its North American food program, the retailer launched a $1 hot dog promo that has delivered double-digit sales increases. Premium hot dogs are driving unit growth as Circle K converts more customers to its food program, according to Hannasch.

“Our Top Dog signature hot dog program is now in nearly 570 stores and we are preparing for a launch across all U.S. business units in the coming months,” he shared.

Moving to the backbar, Couche-Tard is seeing strength in alternative tobacco segments in the U.S. and Canada, and in markets in Europe where the company is allowed to launch such items.

“We also remain committed to traditional tobacco products, and this quarter we continue our significant expansion of backbars to more locations to not only display tobacco cigarettes, but make room for the tremendous amount of innovation we are seeing in the category,” Hannasch explained.

LEARNINGS FROM EUROPE

The customer experience both inside and outside the c-store is a priority for Couche-Tard and its Circle K network on both sides of the Atlantic Ocean.

“In Europe, we now have about 135 newly redesigned Circle K stores across eight different countries,” the CEO said. “[The work] is a complete redo of the site with attractive designs and food offerings that engage our customers.”

Feedback thus far has been very strong, according to Hannasch.

Couche-Tard also has found success with direct mailers and gamification engagement tactics in driving traffic in Europe. The company recently launched these efforts in Canada and plans to bring them to the U.S. later in the year.

“We have more tools than ever in the toolbox,” Hannasch said.

As of July 21, Couche-Tard’s network comprised 9,792 convenience stores throughout North America. Its North American network consists of 19 business units, including 15 in the U.S. covering 48 states and four in Canada covering all 10 provinces. In addition, through CrossAmerica Partners LP, Couche-Tard supplies road transportation fuel under various brands to more than 1,300 locations in the United States.

In Europe, Couche-Tard operates 10 business units across Scandinavia, Ireland, Poland, the Baltics and Russia. As of July 21, Couche-Tard’s European network comprised 2,706 stores. In addition, under licensing agreements, approximately 2,250 stores are operated under the Circle K banner in 16 other countries and territories.

Originally published at Convenience Store News.


Couche-Tard closes cannabis retailer deal

Couche-Tard LogoAlimentation Couche-Tard Inc. officially entered the cannabis retailing sector with the closing of its investment in Fire & Flower Holdings Corp., an independent cannabis retailer.

Based in Edmonton, Alberta, Fire & Flower Holdings Corp. operates or licenses 23 cannabis retail stores in Alberta, Saskatchewan and Ontario; a wholesale distribution division in Saskatchewan; and the HiFyre digital retail platform.

Last month, Couche-Tard announced it would make a strategic investment in Fire & Flower, providing the latter with additional capital to further accelerate its expansion strategy.

Key points of the deal include:

  • Couche-Tard invested approximately $26 million in the form of unsecured convertible debentures to obtain a 9.9% ownership interest in Fire & Flower on a fully diluted basis.
  • Couche-Tard has also been issued common share purchase warrants that, if exercised in full, would subsequently increase its ownership interest to 50.1 percent on a fully diluted basis.

Following the closing of the transaction, Fire & Flower appointed Jeremy Bergeron to the company’s board of directors.

“Through this strategic investment, we reinforce our intention to become a key player in North America’s cannabis industry,” said Brian Hannasch, president and CEO of Couche-Tard. “We are excited to see what we can achieve together with Fire & Flower, as we further expand in Canada and look to leverage our presence in the United States and beyond.”

Additionally, the common shares in the capital of Fire & Flower commenced trading on the Toronto Stock Exchange as of Aug. 7.

“Combining Couche-Tard’s expertise in scaling retail stores with Fire & Flower’s retail experience and proprietary Hifyre digital platform positions our company extremely well to capitalize on new cannabis markets as they emerge,” commented Trevor Fencott, CEO, Fire & Flower.

Based in Laval, Couche-Tard’s worldwide total network includes more than 16,000 convenience stores, which primarily operate under the Circle K banner.

Originally published at Convenience Store News. 


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CrossAmerica exiting retail operations as Circle K takes over

Screen Shot 2019-08-13 at 3.04.52 PMCrossAmerica Partners LP is making good on its strategic initiatives, moving closer to exiting direct retail operations and according to President and CEO Gerardo Valencia, the company is confident about delivering on its goals for the future.

In May, CrossAmerica and Alimentation Couche-Tard Inc. completed the first in a series of asset swaps.

“We completed our first tranche of the asset exchange with Circle K on May 21 in which we received 60 sites,” Valencia said during CrossAmerica’s second-quarter earnings call on Aug. 6.

The sites are now under CrossAmerica’s wholesale fuel segment.

“We are now working on our second one and we have signed contracts with dealer for 65 additional sites. Most of which will be part of the second tranche of assets to be exchanged,” he explained.

According to the chief executive, the company is completing its final due diligence and expect to the transactions finalized before the end of the third quarter.

Based on the current timeline CrossAmerica expects the final assets to change hands by the first quarter of 2020.

As part of the overall exchange agreement, CrossAmerica will receive 192 company-operated convenience and retail fuel stores in the United States. Of the sites, 162 are fee-based and 30 are leased. The transaction is valued at $184.5 million, as Convenience Store News previously reported.

CrossAmerica’s general partner, CrossAmerica GP LLC, is a wholly owned subsidiary of Couche-Tard.

For its part, Couche-Tard’s Circle K division will receive the real estate property for 56 U.S. company-operated convenience and retail fuel stores currently leased and operated by Couche-Tard/Circle K.

In addition, Circle K will receive 17 company-operated stores in the upper Midwest region of the U.S. Fourteen of the sites are fee-based and three are leased. All of the 17 sites are currently part of CrossAmerica’s retail segment.

Those assets also have an aggregate value of approximately $184.5 million.

In addition to the asset swap pact with Couche-Tard, CrossAmerica has been making progress on its rebranding efforts at the former Jet-Pep sites in Alabama. CrossAmerica acquired the sites in late 2017.

“Over half of the 90 sites have now been hard branded and reimagined through the Marathon brand, and we have changed dispensers in over half of the network,” Valencia said.

“As we improve the network quality, we’re seeing the benefits as we planned, optimizing the volume and profitability of the network, with an increase of 47%t over the first half of 2018,” he explained. “As we complete the work by the third quarter of the year, we expect further growth from these networks.”

In addition, as the second quarter was coming to a close, CrossAmerica entered into a master fuel supply and lease agreement with Applegreen plc. Under the terms of the agreement, Applegreen will run 46 company-operated retail stores in the Upper Midwest.

“We are very excited to expand our relationship with them. They are very strong operator and we expect to finish the year with over 100 sites by the end of 2019,” Valencia said.

Q2 FINANCIALS

In the second quarter, CrossAmerica reported $13.9 million in operating income and $6.4 million in net income. This compares to an operating loss of $1.6 million and a net loss of $6.9 million for the second quarter of 2018.

This resulted in adjusted EBITDA growth and strong distributable cash flow, Valencia noted. Specifically, adjusted EBITDA was $27.7 million and distributable cash flow was $22.3 million.

“As previously mentioned, we plan to exceed our direct retail operations to focus on working what we do best. We expect that as we do this, our adjusted EBITDA will actually grow as we generate efficiencies in this process,” he said.

In addition, CrossAmerica will continue to assess other opportunities whether that is third party acquisitions or current assets at Circle K, according to Valencia.

“All of these will continue to be with discipline to continue to deliver growth. We are growing and delivering on our plan,” he said.

Allentown-based CrossAmerica is a wholesale distributor of motor fuels and owner and lessee of real estate used in the retail distribution of motor fuels. Formed in 2012, CrossAmerica Partners LP is a distributor of branded and unbranded petroleum for motor vehicles in the United States and distributes fuel to approximately 1,300 locations and owns or leases nearly 1,000 sites. With a geographic footprint covering 31 states, the partnership has relationships with several major oil brands, including ExxonMobil, BP, Shell, Chevron, Sunoco, Valero, Gulf, CITGO, Marathon and Phillips 66.

Originally published at Convenience Store News. 


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Couche-Tard celebrates global Circle K rebranding accomplishments

Circle K Logo Sm_121317In September 2015, Alimentation Couche-Tard Inc. embarked on a journey to unite its vast convenience store network under one umbrella: a new global Circle K brand.

The move followed several acquisitions Couche-Tard made in Europe, including the retail assets of Statoil Fuel & Retail ASA in Norway, Topaz in Ireland and Shell in Denmark; as well as its purchase of The Pantry Inc., parent company of Kangaroo Express, in the southeast United States.

Now, three years in, the Laval-based retailer has reached a significant milestone in the journey, Couche-Tard President and CEO Brian Hannasch announced during the company’s fourth-quarter fiscal 2019 earnings call in July.

According to the chief executive, Couche-Tard “has made tremendous progress” this year expanding the global Circle K brand to more than 5,600 stores in North America and more than 2,000 stores in Europe.

“The most exciting benchmark this quarter was the finalization of the rebranding project in Europe, as Ireland is now complete,” Hannasch said, adding that “the march west” in the U.S. is proceeding at a rapid pace.

Approximately 98% of the company’s sites in its U.S. Rocky Mountain Business Unit and 550 stores — roughly 80% — in the Texas Business Unit are now sporting the new global Circle K brand.

Couche-Tard expects to finish the rebranding efforts in Texas, which are mostly CST sites, in fiscal 2020. In addition, the Grand Canyon Business Unit — previously the company’s Arizona Business Unit — is more than halfway completed.

“This ambitious rebranding strategy, which began about three and half years ago, continues to be a real win for our business,” Hannasch said. “With our key partners, we are now able to leverage national promotional campaigns and gain penetration in our private label products.

“For our customers, the aided and non-aided awareness across the globe has been outstanding,” he continued. “For our team members, there is now a foundation for our shared employee culture and pride in Circle K — which is probably the best payoff of all in this journey.”

CIRCLE K FUEL BRAND

In the fourth quarter of fiscal 2019, Couche-Tard also continued to grow its Circle K fuel brand. In Europe, the retailer is almost finished converting its Statoil, Topaz and Shell locations to the Circle K fuel brand. In the U.S., 900 sites were offering the brand by the end of the fiscal year.

“This unification of the Circle K brand inside our stores and at our fuel islands is contributing topline growth, and our easy pay ACH program — which gives customers a discount on fuel — is growing in penetration every day,” Hannasch noted.

As of April 28, Couche-Tard’s network comprised 9,866 convenience stores throughout North America, including 8,629 stores with fuel. Its North American network consists of 19 business units, including 15 in the United States covering 48 states and four in Canada covering all 10 provinces. In addition, through CrossAmerica Partners LP, Couche-Tard supplies road transportation fuel under various brands to approximately 1,300 locations in the U.S.

In Europe, Couche-Tard operates a broad retail network across Scandinavia, Ireland, Poland, the Baltics and Russia through 10 business units. As of April 28, Couche-Tard’s European network comprised 2,709 stores.

In addition, under licensing agreements, more than 2,150 stores are operated under the Circle K banner in 15 other countries and territories, which brings the worldwide total network to more than 16,000 stores.

 

Originally published at Convenience Store News. 


Fire & Flower Retail Stores (C) 2019 Fire & Flower Inc. (CNW Group/Fire & Flower Holdings Corp.)

Couche-Tard makes strategic cannabis move with investment in Fire & Flower

Fire & Flower Retail Stores (C) 2019 Fire & Flower Inc. (CNW Group/Fire & Flower Holdings Corp.)

Fire & Flower retail store. 

Convenience store chain operator Alimentation Couche-Tard Inc. has made a strategic investment in Fire & Flower Holdings Corp., which will use the funds to develop its Hifyre digital retail platform and expand its network of cannabis retail stores.

Couche-Tard’s initial investment in the Edmonton-based company, announced Wednesday, will give it rights to 9.9% of Fire & Flower’s equity and the potential to increase its stake to 50.1% for a total of $380 million.

“Couche-Tard is excited to make this strategic investment in one of the fastest growing cannabis ‘pure-play’ retailers,” the Quebec-based retailer’s president and CEO Brian Hannasch said in a statement.

“This investment in Fire & Flower, with a path to a controlling stake, will enable us to leverage their leadership, network and advanced digital platform to accelerate our journey in this new and flourishing sector.”

Fire & Flower currently operates or licenses 23 cannabis retail stores in Alberta, Saskatchewan and Ontario and a wholesale distribution division in Saskatchewan.

“This strategic investment by Couche-Tard, one of the world’s largest retailers, is transformative for Fire & Flower,” CEO Trevor Fencott said in a statement.

He added that Couche-Tard’s leadership team and international footprint in major markets such as the United States, Mexico and Europe “provide us with outstanding opportunities for aggressive growth.”

Alimentation Couche-Tard is one of North America’s largest operators of convenience stores and gas bars, primarily under the Circle K global brand and under the Couche-Tard banner in its home province of Quebec.

The companies say an indirect subsidiary of Couche-Tard will initially buy about $26 million of convertible debt securities that can be converted to 24.3 million common shares at a price of $1.07 each, representing 9.9% of equity.

At the same time, Couche-Tard will receive three series of warrants allowing it to purchase more shares. It will also get the right to top up its investment to maintain its ownership percentage.

Fire & Flower’s stock is currently listed on the TSX Venture Exchange but it has received conditional approval to list its shares on the Toronto Stock Exchange concurrent with the transaction.

Fire & Flower’s stock price jumped 20% to a two-month high at $1.37 a share following the announcement, while Couche-Tard stock was essentially flat at $80.73 in early trading Wednesday.

 


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Couche-Tard expands testing of electric vehicle charging in Europe

Electric Vehicle Charging Sign Lg_112917As the future of mobility evolves, so too does Alimentation Couche-Tard Inc. The global retailer is continuing to expand its network of electric vehicle (EV) charging stations in Europe to meet consumers’ changing mobility needs.

To date, the Laval-based convenience store operator has opened nearly 150 EV charging stations at its Circle K locations in Europe. The plan is to top more than 200 stations by the end of this fiscal year, President and CEO Brian Hannasch said during Couche-Tard’s fourth-quarter fiscal year 2019 earnings call, held July 10.

At these Circle K locations, Couche-Tard has redesigned the food offering and store layouts in order to drive more customers into the store and encourage larger basket purchases while customers are waiting for their EV charging to be completed.

“Small locations have a handful of speed chargers, while we also have opened the first Circle K highway locations with large charge parks offering up to 20 and 30 speed chargers at the same locations,” Hannasch reported.

Since at least last year, Couche-Tard has been testing the new mobility offering in Europe. It also designated Norway as a laboratory for testing different approaches to the changing fuels market, as Convenience Store News previously reported.

As of April 28, Couche-Tard’s network in North America comprised 9,866 convenience stores, including 8,629 stores with fuel. Its North American network consists of 19 business units, including 15 in the United States covering 48 states and four in Canada covering all 10 provinces. In addition, through CrossAmerica Partners LP, Couche-Tard supplies road transportation fuel under various brands to approximately 1,300 locations in the U.S.

In Europe, Couche-Tard operates a broad retail network across Scandinavia, Ireland, Poland, the Baltics and Russia through 10 business units. As of April 28, Couche-Tard’s European network comprised 2,709 stores.

In addition, under licensing agreements, more than 2,150 stores are operated under the Circle K banner in 15 other countries and territories, which brings the worldwide total network to more than 16,000 stores.

Originally published at Convenience Store News. 


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Couche-Tard strategic plan aims to double net profit in five years

UnknownQuebec convenience store giant Alimentation Couche-Tard aims to double its net earnings in the next five years.

The company, which primarily operates under the Circle K banner, says it will achieve the target through a combination of organic growth and further acquisitions.

Chief executive Brian Hannasch describes the goal as “ambitious” but one that can be achieved by remaining true to its core business while maximizing its strengths.

Couche-Tard’s net profit grew 10% last year to US$1.8 billion while adjusted earnings per share were up 27.7% to $3.32 as revenues increased 15%t to US$59.1 billion.

The retailer has become one of the world’s largest convenience store chains through a series of acquisitions and adoption of coffee, food and cold beverage programs that grew by double digits last year.

Analyst Keith Howlett of Desjardins Capital Markets says doubling its profitability will depend on sustained sales momentum and expanded gross margins that will likely come from a shift in product mix to high margin food service.

Last week, Couche-Tard missed expectations as its net income attributable to shareholders decreased 25% to US$293.1 million in the fourth quarter of its fiscal year on a dip in revenues.

The company says it earned 52 cents per share for the period ended April 28, down from 69 cents per share or $391 million a year earlier. The company received a net tax benefit of $69.7 million in the fourth-quarter of fiscal 2018 from U.S. tax cuts.

Adjusted profits of 52 cents per share compared with 59 cents per share in the fourth quarter of 2018.

Revenues fell 3.7 per cent to $13.1 billion from $13.6 billion.

The retailer was expected to earn 54 cents per diluted share in adjusted profits on $13.3 billion of revenues, according to analysts polled by Thomson Reuters Eikon.

For the full year, Couche-Tard’s net profit increased 10% to $1.8 billion or $3.25 per share, up from $1.67 billion or $2.95 per share in 2018. Adjusted earnings were up 27.7 per cent to $3.32 per share. Revenues were $59.1 billion, up 15% from $51.4 billion.


Ontario to issue 50 new cannabis store licences: What could this mean for c-stores?

cannabisOntario is set to get 50 more cannabis stores starting in October, and applicants will have to first show they have their finances and retail space ready to go.

The announcement June 26th comes as some of the first 25 of the province’s legal pot shops that were supposed to open April 1 are still not up and running.

Those initial retailers were chosen through a lottery to open Ontario’s first brick-and-mortar cannabis stores—when the drug became legal recreationally last October it was only available online through the government-run Ontario Cannabis Store—and that lottery system has faced criticism for not including a merit component.

In other Canadian jurisdictions allowing for the private sale of cannabis, successful retailers often include convenience stores. For instance, of the 24 retailers selected to qualify for cannabis sales in Newfoundland and Labrador, one is a convenience store in Labrador City. Last summer, a Co-op gas-bar in Calgary was given the green light.

Convenience operators in Ontario are watching the situation. One of the questions is whether the government will allow cannabis stores-within-a-store or insist they be entirely separate.

Either way, convenience-store operators like Alimentation Couche-Tard, which has a large number of Ontario locations, are well positioned.

“We have the ability to sell this product while meeting all government requirements (and) we can train our staff on verifying the identity of all consumers, regardless of their age,” Couche-Tard founder and executive chairman Alain Bouchard foreshadowed at the company’s 2017 annual meeting.

In February 2019, Alimentation Couche-Tard Inc. entered into a multi-year trademark license agreement with Canopy Growth Corporation, one of the winners of the Alcohol and Gaming Commission of Ontario’s Expression of Interest Application Lottery, who was preparing to operate a “Tweed” branded retail store in London, Ont. The store opened in May in a shopping plaza that is also home to Walmart, LCBO, Beer Store, Movie Theatre, Farm Boy and others.

In a release, the new partners stated: “Through this partnership, Alimentation Couche-Tard is aiming to lean on Canopy Growth’s cannabis expertise and leverage its experience with other age-restricted products to focus on the safe, responsible and lawful sale of cannabis, consistent with the legislation enacted by the federal and provincial governments. As two Canadian-made and globally-positioned companies, the London location will serve as an important entry to market that could lead to future international opportunities.”

“Alimentation Couche-Tard is excited about taking a leadership role in the development of cannabis retailing excellence in this major Canadian market. We believe the Ontario Cannabis Store and private retailers will co-exist under a tightly regulated framework with common goals to protect public health and safety,” said Couche-Tard president and CEO Brian Hannasch.

The Alcohol and Gaming Commission of Ontario will hold a lottery on Aug. 20 for the next 42 retail store authorizations. Another eight stores will be located on First Nations reserves through a separate process.

For this lottery, applicants will have to show evidence that if they are selected, they have already secured retail space that could be used as a store and that they have enough capital to open it, the AGCO said.

One licenced cannabis producer said the latest initiative will position the industry for significant sales growth in Canada’s largest province.

“After the first 25 stores began to open in Ontario, the industry saw overall sales of cannabis basically double,” Dr. Avtar Dhillon, executive chairman and president of Emerald Health Therapeutics said in a statement.

“Adult-use consumers are showing a preference for going into a physical location where they can interact with educated, savvy budtenders and we anticipate that the further expansion of physical stores in Ontario and Canada will strongly serve the growth of legal cannabis sales.”

The Ontario government decided on an initial round of just 25 stores, citing national supply issues, but that appears to be easing.

“Our government is continuing to take a responsible approach to opening cannabis stores across Ontario, allowing private sector businesses to build a safe and convenient retail system to combat the illegal market,” Finance Minister Rod Phillips said in a statement.

“With marginal improvements in national supply, we are proceeding to issue up to 50 new cannabis store licences.”

Attorney General Doug Downey said in a statement that a phased approach is still necessary.

“While the federal supply issues persist, we cannot in good conscience issue an unlimited number of licences to businesses,” he wrote.

Omar Khan, a vice-president with Hill+Knowlton Strategies who advises several clients in the cannabis industry, said the announcement is a positive step, but called for further action.

“If the government wants to eliminate the illicit market they will need to ensure that consumers are able to access legal product offerings conveniently and in a timely manner,” he said in a statement.

“This means moving aggressively towards an open licensing system as soon as the national supply situation permits, and working with the private sector to significantly improve the current online customer retail experience.”

The 42 new stores selected through the lottery will be distributed regionally, with 13 in the city of Toronto, six going to the Greater Toronto Area, 11 in the west region, seven going to the east region, and in the north, one each in Kenora, North Bay, Sault Ste. Marie, Thunder Bay and Timmins.

Stores will be allowed to open in any municipality regardless of population if the community did not opt out of having cannabis stores.

The process for First Nation stores will start in July on a first-come, first-served basis.

With files from Canadian Press. 


Couche-Tard & CrossAmerica complete first in series of asset swaps

Couche-Tard CrossAmerica Logos_Sm_121718Alimentation Couche-Tard Inc. and CrossAmerica Partners LP completed the first transaction in an asset swap pact.

The two companies entered into the Asset Exchange Agreement in December 2018. As part of this exchange agreement, CrossAmerica will receive 192 company-operated convenience and retail fuel stores in the United States. Of the sites, 162 are fee-based and 30 are leased. The transaction is valued at $184.5 million.

CrossAmerica’s general partner, CrossAmerica GP LLC, is a wholly owned subsidiary of Couche-Tard.

For its part, Couche-Tard’s Circle K division will receive the real estate property for 56 U.S. company-operated convenience and retail fuel stores currently leased and operated by Couche-Tard/Circle K.

In addition, Circle K will receive 17 company-operated stores in the upper Midwest region of the U.S. Fourteen of the sites are fee-based and three are leased. All of the 17 sites are currently part of CrossAmerica’s retail segment.

Those assets also have an aggregate value of approximately $184.5 million.

In this first transaction, Couche-Tard transferred to CrossAmerica 60 (52 fee and eight leased) U.S. company-operated convenience and fuel retail stores having an aggregate value of approximately $58.1 million.

In exchange, CrossAmerica transferred to Couche-Tard assets having an aggregate value of approximately $58.3 million. These assets include all 17 of the Upper Midwest properties and the real property for eight master-lease properties, according to the two companies.

Before the completion of the first tranche, Couche-Tard struck dealer agreements for Circle K c-stores transferred to CrossAmerica. The pacts included leases and fuel supply agreements with independent dealers who will lease and operate the stores.

These agreements were assigned to CrossAmerica as part of the exchange.

Under a Sub-Jobber Agreement, Couche-Tard will supply fuel to CrossAmerica for resale to the dealers at those 60 stores after the exchange. The terms of that agreement were unanimously approved by the independent Conflicts Committee of the board of CrossAmerica’s general partner in December.

The existing fuel supply arrangements for the eight master lease properties will remain unchanged.

When the two companies first agreed to the asset swap, they expected the exchange to take place through a series of tranches over 24 months. However, the two now anticipate completing the transactions by the end of the first quarter of calendar year 2020.

“We are very pleased with the process we have established to make this a smooth and fast transition. We have identified very strong operators to maximize the potential of the sites we are taking over from Circle K and have a strong pipeline for the remaining 132 sites,” said Gerardo Valencia, CEO and President of CrossAmerica.

Laval-based Alimentation Couche-Tard is the leader in the Canadian convenience store industry. In the United States, it is the largest independent convenience store operator in terms of the number of company-operated stores. In Europe, Couche-Tard is a leader in convenience store and road transportation fuel retail in the Scandinavian countries (Norway, Sweden and Denmark), in the Baltic countries (Estonia, Latvia and Lithuania), as well as in Ireland and has an important presence in Poland.

Allentown, Pa.-based CrossAmerica Partners is a wholesale distributor of motor fuels, and owner and lessor of real estate used in the retail distribution of motor fuels.  Formed in 2012, it is a distributor of branded and unbranded petroleum for motor vehicles in the U.S. and distributes fuel to more than 1,200 locations and owns or leases approximately 900 sites. With a geographic footprint covering 31 states, it has well-established relationships with several major oil brands, including ExxonMobil, BP, Shell, Chevron, Sunoco, Valero, Gulf, Citgo, Marathon and Phillips 66.

Originally published at Convenience Store News.