Sale Of Circle K Stores 'due To Local Developments'

Canadian convenience store operator Alimentation Couche-Tard has entered the Asian market with a deal to take over Circle K stores in Hong Kong for about HK$2.79 billion.

Convenience Retail Asia Limited (CRA) – which runs abut 340 Circle K stores around town and has been operating in Hong Kong for 35 years – said on Thursday that it's disposing of the business after reviewing the outlook of the stores.

CRA said developments in the SAR prompted management to make the move, especially when the convenience store business involves a heavy logistical set-up and supply chain infrastructure.

"Recent social and economic development (including the Covid-19 pandemic) in Hong Kong has spurred the management team of the Company to examine the long-term strategic options of the Convenience Store Business in Hong Kong... taking into account its target customer-base such as tourists and office workers," it said in a submission to the Hong Kong stock exchange.

CRA also said it planned to declare a special dividend of HK$3.85 dollars per share to its shareholders, to be paid before the end of the year.

Chairman Victor Fung said the board fully endorses the sale and believes it's a win-win for both companies.

Couche-Tard also said it's happy with the deal, which will be financed through available cash on hand and is expected to close by the end of December.

“I have followed Circle K Hong Kong’s progress closely for decades and deeply admire its leadership team and retail expertise. I look forward to welcoming their team members and stores into the Couche-Tard family," said Alain Bouchard, the founder of Couche-Tard in a statement.

Shares in CRA jumped as much as 28 percent on Thursday morning in Hong Kong after the deal's announcement.