LAVAL, QC - Alimentation Couche-Tard Inc. ('Couche-Tard' or the 'Company') (TSX: ATD.A) (TSX: ATD.B) today announced that it 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, a subsidiary of Convenience Retail Asia Limited ('CRA'), operates a network of Circle K-licensed convenience stores, with 340 company-operated sites in Hong Kong and 33 franchised sites in Macau. 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 currently holds 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, with meaningful room to grow organically. Furthermore, Circle K HK has developed solid expertise in loyalty, with approximately 1.6 million 'OK Stamp It' members, and has established a strong private label program, as well as advanced merchandising, technology and supply chain capabilities. Over time, Couche-Tard 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.
Alain Bouchard, Founder and Executive Chairman of Couche-Tard's Board of Directors, said: 'I have followed Circle K Hong Kong's progress closely for decades and deeply admire its leadership team and retail expertise. 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 Kong and 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, said: 'The Board fully endorses the sale of Circle K Hong Kong to our long-term partner and franchisor. This is 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.'
Richard Yeung, CEO of CRA, added: 'We are very pleased to have reached this agreement with Couche-Tard. Having the brand owner directly involved in the business will create new opportunities for the brand and our staff. I am grateful to the management and employees of Circle K Hong Kong for their dedication over the past decades and am excited that they will be joining a multinational industry leader who shares our commitment to serving the local community.'
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, which is expected to close by December 31, 2020, will be financed through available cash on hand and will be subject to usual closing conditions, including the approval by CRA shareholders, as well as regulatory clearances and customary conditions as specified in the purchase agreement.
Investor Conference Call
Couche-Tard management will host a conference call and webcast to discuss the transaction on Thursday, November 5, 2020 at 8:00 a.m. EST (9:00 p.m. HKST). A presentation will be posted to the Investor Relations section of the company's website at https://corpo.couche-tard.com/en/investor-relations/corporate-presentations/ prior to the call.
When: Thursday, November 5, 2020
Time: 8:00 a.m. EST (9:00 p.m. HKST)
Live call dial-in: (888) 390-0549 (NA toll-free) or (416) 764-8682 (International)
Conference ID: 12215874#
Webcast: A live webcast of the call can be accessed from the Investor Relations section of Couche-Tard's website at https://corpo.couche-tard.com/en/investor-relations/corporate-presentations/. The webcast will be archived and available for replay following the call.
About Alimentation Couche-Tard Inc.
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.
As of July 19, 2020, Couche-Tard's network comprised 9,274 convenience stores throughout North America, including 8,088 stores with road transportation fuel dispensing. Its North American network consists of 18 business units, including 14 in the United States covering 47 states and 4 in Canada covering all 10 provinces. Approximately 109,000 people are employed throughout its network and at its service offices in North America.
In Europe, Couche-Tard operates a broad retail network across Scandinavia, Ireland, Poland, the Baltics and Russia through 10 business units. As of July 19, 2020, Couche-Tard's network comprised 2,714 stores, the majority of which offer road transportation fuel and convenience products while the others are unmanned automated fuel stations which only offer road transportation fuel. Couche-Tard also offers other products, including aviation fuel and energy for stationary engines. Including employees at branded franchise stores, approximately 22,000 people work in its retail network, terminals and service offices across Europe.
In addition, under licensing agreements, close to 2,350 stores are operated under the Circle K banner in 15 other countries and territories (Cambodia, Egypt, Guam, Guatemala, Honduras, Hong Kong, Indonesia, Jamaica, Macau, Mexico, Mongolia, New Zealand, Saudi Arabia, the United Arab Emirates and Vietnam), which brings the worldwide total network to close to 14,350 stores.
For more information on Alimentation Couche-Tard Inc. or to consult its quarterly Consolidated Financial Statements and Management Discussion and Analysis, please visit: https://corpo.couche-tard.com.
About Convenience Retail Asia Limited
CRA, a member of Fung Retailing Group, is principally engaged in the operation of Circle K convenience stores, Saint Honore cake shops and Zoff eyewear chain in Southern China, including Hong Kong, Macau and Guangzhou. As at June 30, 2020, the Group operates a total of 373 Circle K stores in Southern China. Together with the Saint Honore chain, which currently has a total of 125 stores in Hong Kong, Macau and Guangzhou, and 11 Zoff eyewear stores in Hong Kong, the Group operates a total network of 509 outlets.
The statements set forth in this press release, which describes Couche-Tard's objectives, projections, estimates, expectations or forecasts, may constitute forward looking statements within the meaning of securities legislation. Positive or negative verbs such as 'believe', 'can', 'shall', 'intend', 'expect', 'estimate', 'assume' and other related expressions are used to identify such statements. Couche-Tard would like to point out that, by their very nature, forward-looking statements involve risks and uncertainties such that its results, or the measures it adopts, could differ materially from those indicated in or underlying these statements, or could have an impact on the degree of realization of a particular projection. Major factors that may lead to a material difference between Couche Tard's actual results and the projections or expectations set forth in the forward-looking statements include the effects of the integration of acquired businesses and the ability to achieve projected synergies, uncertainty related to the duration and severity of the current COVID-19 pandemic, fluctuations in margins on motor fuel sales, competition in the convenience store and retail motor fuel industries, exchange rate variations, and such other risks as described in detail from time to time in the reports filed by Couche-Tard with securities regulatory authorities in Canada. Unless otherwise required by applicable securities laws, Couche-Tard disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking information in this release is based on information available as of the date of the release.
SOURCE Alimentation Couche-Tard Inc.