Metro to sell part of Couche-Tard stake

Tue Jan 22, 2013 5:17pm EST
 

(Reuters) - Canadian grocer Metro Inc MRU.TO said on Tuesday it would sell nearly half of its stake in Alimentation Couche-Tard Inc (ATDb.TO: Quote) for C$479 million ($482 million), cashing in some of its investment in the gas-bar and convenience store operator.

Metro will sell 48.2 percent of its Couche-Tard stake to BMO Nesbitt Burns Inc, National Bank Financial and TD Securities Inc at C$47.90 a share. Couche-Tard closed at C$48.98 on the Toronto Stock Exchange on Tuesday.

Metro Chief Executive Eric La Fleche said the company made the decision "given the market value of our holdings in Couche-Tard relative to Metro's total value." Couche-Tard's stock has risen more than 60 percent over the last 12 months.

"We are evaluating opportunities for the use of proceeds, including investments for growth and returns to shareholders," La Fleche said in a statement.

Canadian grocers like Metro, Loblaw Cos Ltd L.TO and Empire Co Ltd's (EMPa.TO: Quote) Sobeys have come under mounting pressure over the last two years as Wal-Mart Stores Inc (WMT.N: Quote) expands its grocery business in Canada.

Following the sale, Montreal-based Metro - a Couche-Tard shareholder since 1987 - will still have a 5.7 percent economic interest and a 17.0 percent voting interest in the company.

Laval, Quebec-based Couche-Tard has more than 6,000 convenience stores in its network in North America, many of which sell motor fuel, under banners that include Mac's and Circle K.

Thanks to its recent acquisition of Norway's Statoil Fuel & Retail, the company also operates more than 2,000 fuel stations in Scandinavia, Poland, the Baltics and Russia, most of which sell convenience goods.

The transaction announced on Tuesday is a bought deal, which typically involves a small group of institutional investors or banks acquiring a large equity stake in a company at a slight discount to market price.

Such deals eliminate risk to the seller and allow buyers to later market smaller chunks of the equity at a higher price to other investors.

(Reporting by Allison Martell and Euan Rocha in Toronto; Editing by Frank McGurty and Dan Grebler)