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Hot Dogs, Cigarettes and Soufflé: Couche-Tard Makes Play for Carrefour

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Hot Dogs, Cigarettes and Soufflé: Couche-Tard Makes Play for Carrefour

Alimentation Couche-Tard, the Canadian owner of Circle K convenience stores, is exploring a takeover of French grocer Carrefour SA in a roughly $20 billion deal that would create a trans-Atlantic retail giant.

The not-so-typical move comes on the heels of increased M&A activity in the convenience store sector towards the end of 2020.

NOT A TYPICAL DEAL

Couche-Tard’s normal focus has been on convenience stores and gas stations, building an empire by acquiring smaller rivals, reported Bloomberg (Jan. 12). It first did so in Canada before entering the U.S. in 2001 and Europe in 2012.

“A potential offer to acquire Carrefour would vastly expand Couche-Tard’s operating model to extend into grocery and hypermarket operations, and isn’t an obvious move for the convenience-store operator,” said Jennifer Bartashus, a Bloomberg Intelligence retail analyst in the Bloomberg report.

Couche-Tard confirmed that it started “exploratory discussions” on a deal with Carrefour, but it’s not certain the talks will lead to a deal, according to the company.

C-STORES ACTING AS GROCERS

Against this backdrop, convenience stores have been aligning with grocery operations throughout the pandemic.

Forty-three percent of Americans say they live within a mile of a c-store, according to NACS. In rural areas, more than eight in 10 residents (86%) say these locations are within 10 minutes of their home and are often the only place in their area to buy grocery items, fuel, or other products or services.

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Further, because consumers have been avoiding larger stores and staying close to home during the pandemic, convenience stores have gained traction in the grocery segment.

MOVEMENT IN THE SEGMENT

During the end of 2020, M&A activity accelerated in the c-store segment. QuickChek was acquired by Murphy USA in a $645 million deal. Shortly before that, Global Partners LP agreed to purchase the retail fuel and convenience store assets of Consumers Petroleum of Connecticut Inc, while Jay Petroleum acquired a majority of Ottawa Oil’s assets, including 22 c-stores that will expand Jay’s footprint to 57 convenience stores throughout Northern Indiana and Northwest Ohio.

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