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Metro to Raise $482M in Couche-Tard Sale

MONTREAL — Metro Inc. here has agreed to sell nearly half of its holdings in convenience chain operator Alimentation Couche-Tard, raising speculation the retailer is positioning itself to acquire Safeway Canada.

Jon Springer, Executive Editor

January 23, 2013

2 Min Read
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MONTREAL — Metro Inc. here has agreed to sell nearly half of its holdings in convenience chain operator Alimentation Couche-Tard, raising speculation the retailer is positioning itself to acquire Safeway Canada.

Metro said Tuesday it was selling 10 million Class B shares in Couche-Tard to a consortium of banks led by BMO Nesbitt Burns for around $482 million (U.S.). Metro, which has invested in Couche-Tard for 25 years, will retain a 17% ownership stake in Couche-Tard, operator of the Circle K chain.

Eric LaFleche, chief executive officer of Metro, said the company decided to monetize its holdings because of the market value of Couche-Tard relative to Metro’s own value. “We are evaluating opportunities for the use of proceeds, including investments for growth and returns to shareholders," LaFleche said in a statement.

Read more: Loblaw REIT Spurs Debate on Safeway Canada

Karen Short, an analyst following Safeway for BMO Capital Markets in New York, in a research note Wednesday suggested the decision may have been motivated by a need to boost financial flexibility in the event the Pleasanton, Calif.-based retailer decides to sell its holdings in Canada. Loblaw’s recent announcement that it would spin off its real estate assets in a real estate investment trust raised similar speculation, Short noted.

“As it relates to our view of Safeway, we believe a sale of the asset is prudent today given the significant interest in the asset and the potential for a bidding war, but we have no insight as to whether a transaction is imminent, or even likely,” she wrote.

Read more: Metro to Sell Gas Foodservice Division

Metro said Tuesday night that the Couche-Tard sale would be complete in three days. Buyers include BMO Nesbitt Burns, National Bank Financial and TD Securities.

"Metro has been a key shareholder of Couche-Tard since 1987 and we are extremely pleased with the performance of the company," LaFleche said in a statement. "At this time, given the market value of our holding in Couche-Tard relative to Metro's total value, we decided to monetize a portion of our investment. We still retain a significant economic and voting interest in Couche-Tard, and look forward to the continued growth of our investment.”

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Couche-Tard

About the Author

Jon Springer

Executive Editor

Jon Springer is executive editor of Winsight Grocery Business with responsibility for leading its digital news team. Jon has more than 20 years of experience covering consumer business and retail in New York, including more than 14 years at the Retail/Financial desk at Supermarket News. His previous experience includes covering consumer markets for KPMG’s Insiders; the U.S. beverage industry for Beverage Spectrum; and he was a Senior Editor covering commercial real estate and retail for the International Council of Shopping Centers. Jon began his career as a sports reporter and features editor for the Cecil Whig, a daily newspaper in Elkton, Md. Jon is also the author of two books on baseball. He has a Bachelor of Arts degree in English-Journalism from the University of Delaware. He lives in Brooklyn, N.Y. with his family.

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