Alimentation Couche-Tard Inc. · TSX:ATD
Alimentation Couche-Tard — Merger or Acquisition (October 2003)
28 slides from Alimentation Couche-Tard's merger presentation, Oct 6, 2003
Slide 1: Acquisition of The Circle K Corporation by Alimentation Couche-Tard inc.
Acquisition of The Circle K Corporation by Alimentation Couche-Tard inc. Positioning Alimentation Couche-Tard as the North American convenience store consolidator October 6, 2003
Slide 2: Forward-Looking Statements
Forward-Looking Statements This press release contains forward-looking statements with respect to Alimentation Couche-Tard Inc., including its business operations, strategy, financial performance and condition, expectations as to synergies and operations on a combined basis after the transaction. Al
Slide 3: Table of Content
Table of Content Section The Transaction 1 Overview of Circle K 2 Strategic Rationale 3 Integration Plan 4 Financial Analysis 5 Summary 6
Slide 4: 1. The Transaction
1. The Transaction
Slide 5: The Transaction Overview
The Transaction Overview ¾ Alimentation Couche-Tard Inc. (“Couche-Tard”) has announced an agreement with ConocoPhillips for the purchase of The Circle K Corporation (“Circle K”). ¾ Circle K is one of the largest company-operated convenience store enterprises in the United States: ¾ Operates 1,663 co
Slide 6: The Transaction: Opportunity to create substantial value
The Transaction Overview Opportunity to create substantial value ¾ This transaction has numerous benefits for Couche-Tard including: ¾ Positions Couche-Tard as the fourth largest convenience store operator and the leading consolidator in North America; ¾ Increases Couche-Tard’s geographic coverage i
Slide 7: 2. Overview of Circle K
2. Overview of Circle K
Slide 8: Overview of Circle K: General Overview
Overview of Circle K General Overview ¾ Circle K is one of the largest company-operated convenience store enterprises in the United States with 1,663 corporate stores located in 16 states. ¾ High growth sunbelt area. CIRCLE K CORPORATE STORES 9 17 25 158 84 36 66 523 1 37 10 15 94 71 151 366 8
Slide 9: Overview of Circle K: General Overview
Overview of Circle K General Overview ¾ In addition to the 1,663 corporate stores, Circle K has a franchising or licensing relationship with more than 350 stores. ¾ Circle K has more than 14,500 employees, almost 600 of whom work at the company headquarters. ¾ Circle K has an attractive asset mix wi
Slide 10: Overview of Circle K: Financial Overview
Overview of Circle K Financial Overview ¾ For the 12-month period ended June 30, 2003, Circle K achieved ¾ Total Sales of US$3,885 million: Circle K - Sales (LTM) Circle K - Gross Margin (LTM)(1) In-Store Gasoline In-Store Gasoline 50.7% 49.3% 76.4% 23.6% ¾ Profitable operations with EBITDA of appro
Slide 11: Overview of Circle K: General Overview
Overview of Circle K General Overview ¾ Asset base: ¾ Circle K owns the real estate on approximately 900 stores providing operating and financing flexibility. ¾ Supply Agreements: ¾ 5-Year fuel supply agreement with ConocoPhillips; and ¾ Merchandising supply agreements. CIRCLE K OPERATIONAL DATA (1)
Slide 12: 3. Strategic Rationale
3. Strategic Rationale
Slide 13: Acquisition Rationale: General
Acquisition Rationale General ¾ Positions Couche-Tard as the leading convenience store consolidator in North America: ¾ After the transaction, Couche-Tard will be the fourth largest convenience store operator in North America in terms of number of stores. RANK COMPANY 2002 STORES (1)(2) 1 7-Eleven I
Slide 14: Acquisition Rationale: Map of Combined Operations
Acquisition Rationale Map of Combined Operations ¾ Broad geographic coverage. ¾ Combined with its current U.S. Midwest presence, the transaction provides a strong nationwide platform for further expansion in the highly fragmented U.S. market. COMBINED STORE COUNT Western Canada 275 Central Canada 60
Slide 15: Acquisition Rationale: Combined Operations
Acquisition Rationale Combined Operations Couche-Tard Combined Current Operations (1) Company (2) Couche-Tard LTM : C$3.6 billion Combined LTM : C$8.8 billion Canada United States Canada United States 59.7% 40.3% 24.3% 75.7% Revenues Couche-Tard LTM : C$3.6 billion Combined LTM : C$8.8 billion Merch
Slide 16: Acquisition Rationale: Synergies
Acquisition Rationale Synergies ¾ Synergy opportunities: ¾ Couche-Tard estimates that in excess of US$50 million of annual synergies are achievable over an 18-24 month period: ¾ Current G&A per store is significantly higher than that of Couche-Tard; and ¾ Purchasing synergies. ¾ Further upside oppor
Slide 17: Acquisition Rationale: Strategy for Circle K
Acquisition Rationale Strategy for Circle K Couche-Tard’s best practices will enhance performance ¾ Leaner corporate structure. ¾ Opportunities to apply Couche-Tard’s organic growth strategy: ¾ Store 2000 conversion and differentiation strategy; ¾ New stores opening; and ¾ Addition of quick-service
Slide 18: 4. Integration Plan
4. Integration Plan
Slide 19: Integration Plan: Due Diligence
Integration Plan ¾ Agreement to acquire Circle K follows extensive due diligence: ¾ Process initiated at the end of May; ¾ All areas reviewed: ¾ Legal ¾ Accounting ¾ Tax ¾ Environmental ¾ Store visits ¾ Management meetings 19
Slide 20: Integration Plan
Integration Plan ¾ Follows same integration plan as the ones used in the past: ¾ Establish a detailed Integration Plan: ¾ Personnel ¾ Information technologies ¾ Operations and supply functions ¾ Finance and accounting ¾ Communication and execution of Plan ¾ Evaluate Plan ¾ Couche-Tard benefits from
Slide 21: 5. Financial Analysis
5. Financial Analysis
Slide 22: Financial Analysis: Acquisition Price
Financial Analysis Acquisition Price ¾ Attractive purchase price of US$830 million net ¾ Includes approximately 900 fee-owned properties. ¾ This purchase price implies acquisition multiples of: ¾ EBITDA multiple of 5.4x LTM EBITDA (1) of US$155 million on a pro forma basis; and ¾ EBITDA multiple of
Slide 23: Financial Analysis: Uses and Sources of Funds
Financial Analysis Uses and Sources of Funds ¾ Financing structure of the transaction will provide Couche- Tard with the required financial flexibility: USES OF FUNDS (1) (C$ Millions) Net acquisition Price (US$830 million) $1,121 Transaction Costs 50 Long-Term Debt Refinanced 254 Total $1,425 SOURC
Slide 24: Financial Analysis: Combined Financial Statements
Financial Analysis Combined Financial Statements ¾ Transaction is expected to be accretive. Couche- Couche-Tard Circle K Circle K (Millions) LTM LTM June- June-03 LTM June- June-03 Adjustments Combined July 20, 2003 US$(1) C$ (2) Stores 2,575 2,055 2,055 4,630 Total Assets C$1,103.7 US$1,622.0 C$2,1
Slide 25: Financial Analysis: Financing Plan
Financial Analysis Financing Plan CAPITAL STRUCTURE Couche- Couche-Tard Closing (Millions) Current July 20, 2003 Pro forma (1) Debt (C$) 291.5 1,238.4 Equity (C$) 469.3 692.9 Total Debt / Capital 38% 64% Total Debt / EBITDA 1.7x 3.3x ¾ The Company’s objective is to achieve within an 18 month period
Slide 26: 6. Summary
6. Summary
Slide 27: Summary
Summary ¾ Attractive price. ¾ Profitable and well managed company. ¾ Geographic diversification of footprint. ¾ Significantly strengthens U.S. growth platform. ¾ Opportunity to improve performance and for synergies. ¾ Immediately accretive to EPS. ¾ Positions Couche-Tard as the North American conven
Slide 28: Acquisition of The Circle K Corporation by Alimentation Couche-Tard inc.
Acquisition of The Circle K Corporation by Alimentation Couche-Tard inc. Positioning Alimentation Couche-Tard as the North American convenience store consolidator October 6, 2003
Alimentation Couche-Tard — Merger or Acquisition (October 2003) on 6ix