CST Brands, the San Antonio-based company that owns the Corner Store brand, has been purchased for $4.4 billion by Alimentation Couche-Tard Inc., the Canadian parent company to Circle K. The companies have agreed to a $48.53 per share all-cash buyout, which is slightly higher than CST’s closing price of $47.51 last week amid rumors of the sale. Couche-Tard gains ownership of more than 1,000 Corner Store locations in nine states.
A new Circle K business unit will be established in San Antonio when the sale is complete, which both companies expect to happen in early 2017, pending stockholder and regulatory approval.
Spun off from Valero in 2013, CST Brands has been establishing a dominant foothold in the Southwest convenience store market. But a series of acquisitions that were financed by debt put pressure on the company to find a solution to its $1.3 billion debt problem or risk a downgrade of its credit rating.
The board of directors for both companies unanimously agreed to the sale, according to a Couche-Tard news release.
“CST is an excellent company and is well positioned in the Southwestern United States with an important presence in Texas, Georgia, the U.S. Southeast region, New York, and eastern Canada,” stated Couche-Tard President and CEO Brian Hannasch.
As part of the deal, Couche-Tard has agreed to sell certain CST Brands Canadian assets to Parkland Fuel Corporation for $750 million. The Canadian energy company will acquire CST’s Cardlock business, the Dealer and Commission Agents division, Commercial and Home Energy, a number of company-operated stores, and CST’s Montreal head office.
In a separate news release, CST Brands Chairman, President, and CEO Kim Lubel lauded the sale. “After the Board’s comprehensive review of strategic alternatives to enhance stockholder value, we are pleased to reach this agreement with Couche-Tard, which we expect to provide immediate and compelling value to our stockholders,” Lubel said. “With Couche-Tard, we will build upon an extensive and attractive convenience and fuel network with enhanced scale and global reach to best position the combined company for future growth.”
Top Image: Corner Store image courtesy of CST Brands.