Alimentation Couche-Tard Inc. is entering the Asian market via an acquisition.
The convenience store company announced that it has entered into an agreement to acquire Convenience Retail Asia’s Hong Kong unit for $359.80 million on a cash-free and debt-free basis. The business is made up of 340 Circle K-licensed stores in Hong Kong. The deal is expected to close by the end of the year.
Couche-Tard said the transaction will give it a platform in Asia to launch its regional growth ambitions.
"I have followed Circle K Hong Kong's progress closely for decades and deeply admire its leadership team and retail expertise,” said Alain Bouchard, founder and executive chairman of Couche-Tard's board of directors. “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."
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, Couche-Tard stated in a release. It also has developed solid expertise in loyalty, with approximately 1.6 million "OK Stamp It" members, and has developed a strong private label program, as well as advanced merchandising, technology and supply chain capabilities.
"Circle K Hong Kong is one of the best convenience store operators in Asia and will be an excellent fit within our company,” said Brian Hannasch,” president and CEO of Couche-Tard. “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."
As of July 19, 2020, Couche-Tard's network comprised 9,274 convenience stores throughout North America, including 14 business units in the U.S. covering 47 states and four in Canada covering all 10 provinces. It also operates 2,714 stores 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.