RWRetailWire
Back to Discussions
DISCUSSION

Couche-Tard to give 7-Eleven more competition

Written by Tom Ryan

Alimentation Couche-Tard Inc. on Thursday said it agreed to acquire The Pantry. The merger will give the Canadian c-store operator a stronger presence in the Southeastern and Gulf Coast regions of the U.S. and bring its store count in the region close to that of 7-Eleven, the world's largest c-store operator.

Couche-Tard has 6,303 outlets in North America, operating primarily under the Couche-Tard and Mac's banners in Canada as well as Circle K throughout the U.S. The Pantry, which primarily operates under the Kangaroo Express banner, has 1,512 locations. Through owned and franchised operations, 7-Eleven operates about 8,700 stores in North America.

Couche-Tard will pay $36.75 per share, a 27 percent premium to Monday's close. The transaction is expected to close in the first half of 2015.

The Pantry appears to be doing well, doubling its net profit more than in the past two quarters. Like Couche-Tard, it has been focusing on selling more high margin fresh food. It sells its own private label bottled water and is the fifth largest location for Subway restaurants. But the retailer particularly benefited lately from rising gas prices. Most of its locations include gas stations and fuel sales making up the vast majority of company revenue. The majority of Couche-Tard's locations in the North America likewise have fuel services.

The deal adds to a number of mergers in the fuel station space. Last year, Valero Energy Corp spun off CST Brands. In May, Hess Corp agreed to sell off its more than 1,200 gas stations to Marathon Petroleum Corp.

"We expect industry consolidation to continue to be a key theme in the [convenience store] space," Wells Fargo analyst Bonnie Herzog told Reuters.

Discussion Thread0