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ACT checks out Circle K HK
Posted on Thursday, 05 November 2020 10:46
Alimentation Couche-Tard (ACT) is pushing into Asia through the acquisition of Convenience Retail Asia BVI (Circle K HK) from Convenience Retail Asia (CRA) for HKD 2.79 billion (USD 359.81 million).
This British Virgin Islands-incorporated business operates a network of Circle K convenience stores, with 340 company-run sites in Hong Kong and 33 franchised locations in Macau.
CRA started up this unit in the special administrative region in 1985 pursuant to a licensing arrangement granted by ACT, which is now approaching its expiry date in 2025.
As the agreement is approaching its expiry date in 2025, the group began to consider various strategic alternatives, including but not limited to possibly renewing the tie-up or disposing of the business.
Circle K HK currently holds the second largest share in Hong Kong, one of the most economically developed markets in Asia and most densely populated regions in the world, with meaningful room to grow organically, ACT notes in its statement.
Furthermore, the company has established a solid expertise in loyalty, with about 1.60 million members signed up for its OK Stamp It reward scheme.
It has also set up a strong private label programme, as well as advanced merchandising, technology and supply chain capabilities, ACT adds.
The Canadian giant expects to benefit from the acquisition by Circle K HK gaining access to further opportunities in Asia Pacific.
CRA notes the disposal, which is on a cash- and debt-free basis, implies a valuation of 12.0x 2019 unaudited adjusted earnings before interest, tax, depreciation and amortisation and 18.0x 2019 net profit.
Zephyr, the M&A database published by Bureau van Dijk, shows 335 deals targeting the food and beverage store category have been announced globally in 2020 to date.
ACT’s acquisition of Circle K HK will be the 29th largest by value of the year so far.
© Zephus Ltd