LAVAL, Quebec -- Alimentation Couche-Tard Inc. confirmed that it is keen to buy hundreds of retail outlets in California and the U.S. Midwest that ConocoPhillips plans to divest next year, reported The Financial Post.
But Couche-Tard CEO Alain Bouchard cautioned that his acquisition-hungry company may not have a chance to bid on most of the 830 company-owned and dealer-operated stores the Houston-based oil company said it would shed. That is because ConocoPhillips' independent affiliates, which operate 500 of the stores, have first right of refusal. "[image-nocss] We will certainly look at these assets, but I am not confident we can buy a large number of these storesthough we will try," Bouchard told the newspaper.
Desjardins Securities analyst Jessy Hayem told the paper that Couche-Tard is unlikely to land a "bulk acquisition," but could buy many stores "in the eventuality they are not sold to existing dealers as Conoco would like," or during a "second round" of divestitures.
Analysts believe Couche-Tard is well-positioned to buy hundreds of Royal Dutch Shell Group's North American outlets, the report added. Blackmont Capital analyst David Hartley said Shell is focused on investing in exploration and "may want to free up some assets to do that, he told the paper.
Couche-Tard has bought stations from Shell in the past, including a group of 236 outlets this fall in Florida, Denver, Baton Rouge, La., and Memphis, Tenn. Bouchard said his firm has $1.3 billion in resources for further acquisitions.
Hayem said "it's just a matter of time" before Couche-Tard buys more stores from Shell, one of its major U.S. fuel suppliers.
Couche-Tard, the second-largest independent convenience store operator in North America, with about 5,200 outlets, has grown largely through acquisitions, including 1,663-store Circle K stores it bought in 2003 from Conoco for $832 million. It has been in the United States since 2001.
Couche-Tard has been able to bulk up in the United States as oil firms shed thousands of retail outlets in an effort to focus on production. Last year, the company posted total sales of $10.2 billion, 77% of that south of the border, the report said. But with the recent huge run up in oil prices, some companies have put the brakes on selling and instead invested in sprucing up their retail network. That led Bouchard to warn this year that large deals have become trickier to find. Other consolidators are also competing for assets.
That hasn't slowed down Couche-Tard's growth, however. The company has bought about 450 stores in the first seven months of its current fiscal year, ending next April, compared to a full-year target of 200. Bouchard said the company will likely surpass 500 purchases this year and next, according to The Financial Post. Couche-Tard is also renovating or building from scratch hundreds of stores, added the report.
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