Irving Oil Ltd. is shifting the operation of 252 of its convenience stores to Alimentation Couche-Tard Inc.allowing the Quebec company to push into the U.S. northeast and giving New Brunswick’s Irving family a timely injection of cash.
Couche-Tard Inc. announced Thursday the new arrangement means it will lease and operate the convenience stores at key sites in Atlantic Canada and New England.
It will be a major and visible shift along the regions’ highways, with hundreds of Blue Canoe and Mainway signs coming down by the end of the summerreplaced by Couche-Tard, Circle K and Mac’s brands. The familiar Big Stops will remain under Irving control.
In a conference call, analysts were curious about the reasons behind the deal, since it has only been a few years since Irving spent millions of dollars rebranding many of its convenience stores to Blue Canoe.
Harry Hadiaris, a marketing director at Irving Oil, responded that the family company gains an advantage by specializing in selling petroleum products, while Couche-Tard hopes to grow in the U.S. market using its skills as a retailer.
Through past acquisitions, Couche-Tard is already a major convenience store operator in several parts of the United States through its Circle K brand. The company employs 45,000 people and operates nearly 5,700 convenience stores across North America, including 3,440 gas bars.
Meanwhile, Michel Bernard, vice-president of Eastern Canada operations at Couche-Tard, said his company “plans some growth” in the U.S. market as a result of the deal.
However, an industry veteran argues the arrangement is also driven by the Irving family’s desire to raise cash needed to pay for the division of the conglomerate among the families of the three aging brothers.
Dave Collins, vice-president of Wilson Fuel Ltd.the largest independent gasoline retailer in Atlantic Canadasaid he can’t imagine why else the family company would be making the change.
“You’re talking about a drastic change in the culture of these (Irving) operations, and you don’t do that if you’re not losing money, and I’ll guarantee you one thing, those stores they have weren’t losing money,” he said. “It’s to raise cash, the family has talked about splitting up and it’s a great way to raise money to buy out various cousins and uncles.”
The agreement builds on a seven-year-old deal between Irving Oil and Couche-Tard in Quebec.
Of the 252 Irving Oil stores involved in the new agreement, 128 are in New Brunswick, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island. The other 124 are in Maine, New Hampshire, Massachusetts and Vermont.
Irving Oil will retain ownership of the properties and supply gasoline and petroleum products to them. Couche-Tard will have 20-year leases and run the stores under its banners, while the fuel pumps will remain Irving-branded.