Couche-Tard Reportedly Getting Ready To Acquire Speedway

[Alpha8472]

Couche-Tard, parent company of Circle K is selling off 1,250 convenience store locations near Speeway stores. They are preparing to buy all 3,800 Speedway stores.

[storewanderer]

Having to sell off 1,250 stores is pretty significant. Also curious that what Circle K seems to want to get rid of, is all its own stuff (not the Speedway stuff). Unless possibly Speedway is going to sell off some stores too.

Circle K just paid the FTC $3.5 million because they failed to divest sites off and maintain sites as required that were subject to divest in the Holiday/Circle K transaction a few years ago. It appears Circle K is trying to do this selling of 1,250 sites to avoid dealing as much with the FTC in a Speedway transaction.

There is significant overlap in the upper midwest (Holiday territory for Circle K). The Holiday operation is far superior to Speedway's operation in the upper midwest (former SuperAmerica sites) and it would really be a bad thing for their network to shed Holiday locations.

There is also going to be some significant overlap in Tucson, El Paso, and Albuquerque.

Circle K has very few corporate operated stores in CA so I don't think there will be any overlap there.

Not sure how much overlap there is on the east coast, but I assume some.

I would rather see Speedway go to Circle K than to 7-Eleven or EG Group though. However it would be best for customers and from a competitive standpoint for Speedway to stay independent. It is a good operation, it has demonstrated an ability to grow and integrate other chains quickly (their integrations of other chains have been much faster than Circle K's integrations of Kangaroo and Valero Stores). It is unfortunate the activist investors got control of Marathon and are forcing this transaction to take place. Speedway has been a profitable arm of Marathon for decades and is a good synergy for the rest of the Marathon operation.

[klkla]

Sometimes it's good to post a source when you open a new thread.

"Alimentation Couche-Tard — a Canada-based convenience-store giant whose chain of nearly 8,000 Circle K stores in the US includes 5,900 gas stations — has launched a process to sell 1,250 gas stations that are near Speedways, sources close to the situation said.

Couche-Tard is looking to raise about $4 billion with the sale, which would likely be contingent on a deal to buy all of Speedway’s 3,800 locations from Marathon Petroleum. Marathon, which recently revived an auction of Speedway after it got derailed in March by the coronavirus, is being prodded by billionaire Paul Singer to divest Speedway."

https://nypost.com/2020/07/08/circle-k- ... dway-deal/

[storewanderer]

What is interesting is within the past few weeks, Speedway re-started store conversions around SoCal again. They stopped abruptly late last year (that seemed to coincide with the 7-Eleven purchase of the chain), then of course halted conversions due to Coronavirus.

If a transaction with Circle K is imminent it will be interesting to see what happens with the conversions in SoCal.

Speedway is spending quite a bit of money on these site conversions to put Chip readers on the pumps, new systems in the stores, new coffee/soda equipment, new counters, etc. Not just a "change the sign" like Circle K did with its Kangaroo and Valero Stores purchases.

[TW-Upstate NY]

Couche-Tard is looking to raise about $4 billion with the sale, which would likely be contingent on a deal to buy all of Speedway’s 3,800 locations from Marathon Petroleum. Marathon, which recently revived an auction of Speedway after it got derailed in March by the coronavirus, is being prodded by billionaire Paul Singer to divest Speedway."
https://nypost.com/2020/07/08/circle-k- ... dway-deal/

Isn't this the same guy who harangued Hess into selling off their gas stations to (wait for it) Marathon? Must be nice-he walks away with a bundle coming and going.

[jamcool]

I’m not sure the FTC would let CT/Speedway go through without more stores being sold. There is also the question of fuel prices-Speedway is a few cents lower than its competitors-such as Circle K

[storewanderer]

I’m not sure the FTC would let CT/Speedway go through without more stores being sold. There is also the question of fuel prices-Speedway is a few cents lower than its competitors-such as Circle K

I agree. And if you have to sell 1,250 stores to acquire 3,900 stores already you are selling like 30% of what you are purchasing. So how much sense does it even make?

Speedway works because it is an integrated part of Marathon. By refining the gas they can command higher margins by selling it through the Speedway sites. Since Speedway is able to operate stores profitably, this strategy has worked out for them.

Most oil companies for one reason or another could never seem to make this integrated sort of network work in the US and operating gas stations was a major loss making activity for most of the US oil companies so that is why at this point Shell, ExxonMobil, Phillips 66 (Conoco/76), etc. are completely out of the business of operating gas stations in the US. Yet Shell and ExxonMobil have many corporate operated stations in other countries.

Same reason Chevron has retained a small block of corporate operated stations out in CA and a handfull in OR and WA.

But in some cases like with the Valero Stores (Corner Stores), those were profitable and worked as an integrated part of Valero, but Valero was pushed to sell those off so they spun them off and we see that company was not around independently for long before the purchase by Circle K. Same thing appears to be happening now- activist investors in Marathon demanding Speedway be sold off. Not enough to spin it off into an independent company- have to sell it to someone else.

[jamcool]

The Chevron Extra Mile stores are now in a partnership with Jacksons

[storewanderer]

The Chevron Extra Mile stores are now in a partnership with Jacksons

Yes, but Chevron Corporation remains the largest "franchisee" of Extra Mile Stores for its 200ish locations (they do have some Corporate sites that are without Extra Mile). Also those Extra Miles run by Jacksons are just Jacksons Stores. They are even displaying a logo now that says "Extra Mile by Jacksons." They are using more and more Jacksons cups, and private label items continue to be a mix of Jacksons and Extra Mile items. The CA Extra Miles do not do that and are still straight Extra Miles (nothing there says Jacksons). Basically the CA Extra Miles are an entirely different concept than the ones Jacksons is running. Different products, different programs, different prices.

Also will note Speedway conversions continue to happen in SoCal this week. Costa Mesa, Agoura, Baldwin Park, Northridge, La Habra all just came online. They seem to be able to convert close to a dozen locations in a week. Hopefully nobody will miss "USA Gasoline" when it is gone. USA usually was a competitive gas price and same price cash or credit so I guess I shouldn't make fun of them. I am surprised how many USA Gasoline were left in SoCal. The NorCal ones virtually all got Shell or Mobil branding the past few years (and before that some had Chevron very briefly as USA tried to sell itself to Chevron then CA wouldn't approve it and Tesoro ended up with it).

The 751 Baker St. in Costa Mesa is interesting. Google Street View from March 2020 has a Speedway canopy but still branded as USA at this point (one of those conversions that was "frozen" due to Coronavirus) and it is just now rebranding to Speedway in the next day or two.

[submariner]

I've split the topic, and moved it to a topic more appropriate. Thanks for playing!

viewtopic.php?f=21&t=2570