Couche-Tard Wins The Pantry

December 18, 2014, 03:20 pm

CARY, N.C. — Just days after news surfaced that The Pantry Inc. placed itself on the auction block, the locally based operator of Kangaroo Express has inked a merger agreement with Alimentation Couche-Tard Inc.

Under the terms of the deal, Canada-based Couche-Tard will acquire The Pantry in an all-cash transaction valued at $36.75 per share, with a total enterprise value of approximately $1.7 billion including debt assumed. The terms were unanimously approved by the boards of directors of both companies, according to a joint press release issued Thursday morning.

The transaction price represents a premium of 27 percent to The Pantry's closing share price on Dec. 16, the last trading day prior to public media reports that The Pantry was exploring a potential sale, and a premium of 39 percent to the 30-day average share price ending on the same day.

"We look forward to welcoming The Pantry Inc. to the Couche-Tard family," said Brian P. Hannasch, Couche-Tard's president and CEO. "The Pantry is an excellent company and is well positioned in the Southeastern and Gulf Coast regions of the U.S., two of the fastest-growing areas of the U.S. With this transaction, we will add more than 1,500 stores to our network, which will position us as the definitive leader in this region and will reinforce our position as one of the largest convenience store operators in North America.

"We look forward to combining the capabilities of The Pantry team with Couche-Tard to enhance value for our shareholders. We strongly believe that our all-cash offer is compelling for The Pantry's shareholders as it offers them the opportunity to realize full and immediate value for their investment," he continued.

The transaction is expected to close in the first half of 2015, subject to approval by The Pantry's shareholders and customary regulatory approvals. The transaction includes customary breakup fees. This all-cash transaction is expected to be financed by Couche-Tard's available cash, existing credit facilities and a new term loan.

"I am very proud of The Pantry employees and what they have accomplished. The company's current performance is a direct result of the employees' hard work and effort. Their work has clearly been recognized by the marketplace and by Couche-Tard, culminating in this transaction," added Dennis G. Hatchell, president and CEO of The Pantry. "This is an exciting combination of two strong companies that complement each other extremely well. Unlocking the strategic value of these combined firms will benefit the current Pantry shareholders and provide ongoing opportunities for most of our employees.  I sincerely thank and appreciate each of the employees for their contributions to the success of this organization."

Faegre Baker Daniels LLP is acting as exclusive legal advisor to Couche-Tard. BofA Merrill Lynch is acting as exclusive financial advisor to The Pantry. Willkie Farr & Gallagher LLP and Smith Anderson are acting as legal advisors to The Pantry.

Laval, Quebec-based Alimentation Couche-Tard's network is currently comprised of approximately 6,303 convenience stores throughout North America, including 4,851 stores with road transportation fuel dispensing. In Europe, Couche-Tard operates approximately 2,239 stores. In addition, under licensing agreements, about 4,600 stores are operated under the Circle K banner in 12 other countries worldwide, bringing the number of sites in Couche-Tard's network to more than 13,100.

The Pantry is a leading independently operated convenience store chain in the southeastern United States and one of the largest independently operated convenience store chains in the country. As of Dec. 18, the company operated 1,512 stores in 13 states under select banners, including Kangaroo Express, its primary operating banner.