Alimentation Couche-Tard, analysts expect, is likely to make a play for Hess’ retail operations, now that Hess has filed with the SEC, noting it would either distribute its retail business to shareholders in a tax-free spin-off or sell the company, according to The Canadian Press.
“Following receipt of any such offers, the Hess Corp. board of directors will determine which alternative it believes best serves the long-term interests of all Hess Corp. stockholders,” the company said.
Hess is the largest owner of convenience stores along the U.S. East Coast, with operations in 15 states and Washington, D.C.
As of Sept. 30, Hess operated 1,258 stores, including 81 travel plazas and 1,177 convenience stores. Its largest markets are North Carolina, Florida and New York. Some 96 locations are operated by franchisees.
Couche-Tard chief financial officer Raymond Pare declined to comment on a possible bid for Hess, but told The Canadian Press the company has “the capacity to do any transaction with our strong balance sheet.”
Analyst Derek Dley of Canaccord Genuity told The Canadian Press that Couche-Tard can financially support a deal in the $1.5 billion USD range after reducing its debt from the $3.6-billion cash and debt purchase of Europe’s Statoil Fuel and Retail. He added that Hess would be very attractive to Couche-Tard and would help boost its presence in the U.S. Northeast, where it operates Circle K stores.
“When assets like this come up for sale, which isn’t very often, you need to be opportunistic,” he added.
Dley also predicted that Hess will have its choice of suitors and that Couche-Tard will not chase an acquisition or overpay.