Chief executive Alain Bouchard said Norwegian-based Statoil Retail had been restricted from doing business with other oil companies while it was tied to majority owner Statoil. But with that bond broken, Couche-Tard has been receiving calls from players who didn't even know it's name before.
"Now, with this big start in Europe, everybody notices who we are and we got calls," Bouchard said during a news conference Thursday from Oslo.
The Quebec-based retailer has taken control of Scandinavia's leading fuel and convenience store chain, which has 2,300 outlets and operations in central and eastern Europe.
Couche-Tard said 94.1 per cent of Statoil Fuel & Retail shareholders have tendered to its offer. It has also bought an additional 2.7 per cent stake in the market, raising its ownership to 96.7 per cent.
The remaining shares will be added over the next couple of months, but SFR will be incorporated into Couche-Tard's results in the next quarter.
Bouchard said Statoil Fuel & Retail will consider adding new markets outside of its base. The company has previously expressed an interest in Germany.
He added that Couche-Tard's (TSX:ATD.B) entry into Europe would not reduce the pace of acquisitions in North America.
Acquisitions can take six to 12 months to finalize, so the company will use the time to reduce its leverage while maintaining its investment grade credit rating, said chief financial officer Raymond Pare.
"We will manage (leverage) as we did when we did the Circle K acquisition when we did execute a deleveraging plan right after the acquisition in order to regain the flexibility that we need in order to face opportunities."
Statoil Fuel & Retail CEO Jacob Schram called the acquisition another milestone in the company's long history.
"We are looking forward to further develop the business that we are proud of and do that together with our new 100 per cent owner that will support us in growing the European base," Schram said.
Although Statoil Fuel & Retail is the market leader in Sweden and Norway, Schram said there is room for expansion in Denmark and Poland where it has just five per cent market share.
The European market is in a restructuring phase as big oil companies consider selling their retail operations.
"The market in general in the areas where we are operating is absolutely exciting moving forward," Schram told analysts and journalists.
Economic problems in Europe are a concern, but Statoil is geographically diversified to withstand regional problems, much like Couche-Tard is in North America, Bouchard added.
Analyst Michael Van Aelst of TD Securities raised his share price target to $60, up 11 per cent or $6, on the addition of Statoil to Couche-Tard's operations.
"We see the potential for this to occur again, though possibly not to similar peaks as investors' comfort with Europe is believed to be even less than what was the case with the U.S. a decade ago," he wrote in a research note.
Still, Van Aelst said the shares could be volatile over the next few year as disappointing results from Europe, even if temporary, will likely lead to some questioning the company's strategy.
That's what happened when Circle K's initial results were disappointing because of lower fuel margins.
"But few are questioning management's ability to add value in the U.S. any longer," he added.
On the Toronto Stock Exchange, Couche-Tard shares closed down 42 cents at C$44.83 on Thursday.Suggest a correction