|With Latest Deal, Circle K Owner Steps Up Invasion From Canada
A Canadian company is trying to corner the corner-store market in the United States. Alimentation Couche-Tard Inc., which is based outside of Montreal and better known as the owner of Circle K stores, is poised to expand its footprint to 48 states with the acquisition of closely held Holiday Stationstores Inc., a deal announced July 13th. The transaction, valued by analysts at $1.5 billion to $2 billion, extends a buying spree that crossed the border 16 years ago and has now gone global.
The deal by Couche-Tard furthers the reach of a company that’s little known to Americans even though it has more than 7,000 locations in the U.S., according to industry publication CSP. It is Couche-Tard’s third major investment in the U.S. since December 2014, after the acquisition of gas-station chain CST Brands Inc. for almost $4 billion, which closed just weeks ago.
Assuming the deal is approved by regulators, a Canadian company that started with one store in a Montreal suburb in 1980 would have U.S. customers from Texas to Alaska, adding six states to its reach. While the acquisition would move Couche-Tard closer to U.S. market leader 7-Eleven, the industry is highly fragmented, with chains accounting for 37 percent of total stores, according to a Bloomberg Intelligence report from March.
Alain Bouchard, the co-founder and now executive chairman, has gradually expanded the company, first in its home market, then to the rest of Canada, before entering the U.S. in 2001 and Europe in 2012. The company has a no-frills reputation, with top management known for visiting scores of stores before making acquisitions to spot the weaknesses.
In Holiday, Couche-Tard said it identified a “very well-run company” with similar growth prospects and a strong local brand. Strong points include a successful car-wash subscription program, a food commissary that makes thousands of sandwiches a day, and data analytics used for pricing, Chief Executive Officer Brian Hannash told analysts after the announcement.
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