Canada's Couche-Tard to buy Texas-based CST Brands in $4.4 billion deal

(Reuters) - Canadian convenience store operator Alimentation Couche-Tard Inc ATDb.TO said on Monday it would buy U.S. convenience store chain CST Brands Inc CST.N in a deal valued at about $4.4 billion, boosting its presence in southeast United States.

Pedestrians walk past a Couche-Tard convenience store in Montreal, April 18, 2012. REUTERS/Christinne Muschi

San Antonio, Texas-based CST is one of the largest publicly traded fuel retailers in North America and also controls the general partner of gas station company CrossAmerica Partners LP CAPL.N.

The company, spun off from Valero Energy Corp VLO.N in 2013, also operates convenience stores and gas stations in Canada.

“With this transaction we would strategically strengthen our positioning in both the “sun belt” and the east coast of North America,” Couche-Tard Chief Executive Brian Hannasch said in a statement on Monday.

Sun Belt refers to the region that stretches across the southern and southwestern portions of the United States.

Couche-Tard will offer CST Brands shareholders $48.53 per share in cash, a premium of 2.15 percent to the stock’s Friday close.

However, the offer represents a premium of 41.9 percent to CST’s closing price on March 3, the last trading day before the company said it would explore strategic alternatives.

CST, which has been under pressure from activist investors JCP Investment Management and Engine Capital LP, said in March it would explore strategic alternatives.

Excluding debt, the deal is valued at about $3.67 billion, based on Thomson Reuters data.

The deal also underlines the Canadian convenience store operator’s position as one of most acquisitive players in the industry.

Couche-Tard, which has made at least eight acquisitions since 2014, agreed in March to buy 279 Esso-branded fuel and convenience sites from Imperial Oil Ltd IMO.TO for about C$1.69 billion ($1.31 billion).

Couche-Tard also said on Monday it would sell some Canadian assets of CST to Parkland Fuel Corp PKI.TO for about $750 million, after the deal closes, expected in early 2017.

The assets include CST’s self-service fueling stations, commercial and home energy business, and a number of company-operated stores to be determined following the Competition Bureau of Canada’s review of the transaction.

Couche-Tard said it would fund the deal with available cash, existing credit facilities and a new term loan.

($1 = 1.2909 Canadian dollars)

Reporting by Arathy S Nair in Bengaluru; Editing by Sriraj Kalluvila