Edmonton-based cannabis retailer Fire + Flower announced Wednesday it has issued a $25.99 million debenture, convertible to a 9.9 per cent ownership stake, to Quebec’s Alimentation Couche-Tard.

The Laval-based firm said its planned investment “will provide Fire + Flower with additional capital to further accelerate their expansion strategy.”

However, Couche-Tard said it has also received warrants which, if exercised in full, would allow it to boost its stake in Fire + Flower to 50.1 per cent.

Fire + Flower today operates 15 cannabis stores in Alberta, six in Saskatchewan and two in Ontario, with plans in place to open four more shops in Edmonton, one in Whitehorse and one at Swan River, Man. It also runs a wholesale distribution arm in Saskatchewan and a digital retail platform under the name HyFire.

Fire + Flower on Wednesday also began trading on the TSX under the ticker symbol FAF, levelling up from the TSX Venture Exchange.

“Through this strategic investment, we reinforce our intention to become a key player in North America’s cannabis industry,” Couche-Tard CEO Brian Hannasch said in a release.

“We are excited to see what we can achieve together with Fire + Flower, as we further expand in Canada and look to leverage our presence in the United States and beyond.”

Couche-Tard is a major convenience store operator across Canada and the U.S. and in central and eastern Europe. In recent years it began rebranding its Canadian Couche-Tard and Mac’s convenience stores outside Quebec and all its stores elsewhere under the Circle K banner, while keeping the Couche-Tard banner on its Quebec stores.

“Combining Couche-Tard’s expertise in scaling retail stores with Fire + Flower’s retail experience and proprietary HiFyre digital platform positions our company extremely well to capitalize on new cannabis markets as they emerge,” Fire + Flower CEO Trevor Fencott said in the same release.

Couche-Tard in February announced a multi-year agreement with Ontario-based cannabis producer Canopy Growth. That deal so far includes a trademark license agreement with the operator of a London, Ont. store under Canopy Growth’s Tweed banner. — Glacier FarmMedia Network

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Quebec-based Metro Inc. said Wednesday it expects to put up $400 million to modernize and automate its Toronto operations between 2018 and 2023, building two new facilities for fresh and frozen food distribution respectively.

“The new distribution centres will provide improved product assortment and selection accuracy as well as more flexibility which will allow us to improve service to our store network and customers,” Carmen Fortino, the company’s Ontario division head, said in a release. “In addition, they will feature state-of-the-art technology to enhance efficiency.”

Metro said its existing distribution network in Toronto was largely built more than 50 years ago and “no longer meets the evolving needs of the business.”

Its Ontario network today supplies 133 Metro and Metro Plus grocery stores in the province, along with Metro’s discount chain Food Basics, which has 128 Ontario locations.

Metro’s Ontario supply chain today runs through four distribution centres in Toronto and two in Ottawa, with combined staff of over 1,500 employees.

Modernizing and automating parts of that distribution network is expected to lead to cuts of about 180 full-time and 100 part-time jobs starting in 2021, the company said.

Fortino pledged “a range of transition measures” to support laid-off employees, adding that “fortunately, we have some time to plan the transition.”

Metro CEO Eric La Fleche said the planned investment will also enable the company to “continue its growth and expansion in the Ontario market.”

Paying for Coutu

The company’s plan follows its announcement earlier this month that it will buy the Quebec-based pharmacy retail chain Jean Coutu Group in a cash-and-stock deal worth $4.5 billion.

To help finance that deal, Metro on Wednesday also announced plans to sell most of its remaining minority ownership stake in Canada’s biggest convenience store operator, Quebec-based Alimentation Couche-Tard.

Those plans include Metro and its Metro Holdings arm selling almost 11.4 million Class B subordinate shares of Couche-Tard for $57.17 per share, or about $650 million, to dealers led by National Bank Financial and BMO Capital Markets.

Metro will also sell CDP Investissements and CDPQ Marches Boursiers, subsidiaries of Caisse de depot et placements du Quebec, another 11.4 million Class A multiple voting shares of Couche-Tard at $57.17 a share, also about $650 million.

Couche-Tard itself, whose banners in Canada also include Mac’s and Circle K, will buy back 4.4 million of its Class B subordinate voting shares from Metro for cancellation at $57.17 each, or about $250 million.

Once those deals close, Metro Holdings will still have about 5.1 million, or 3.9 per cent, of Couche-Tard’s Class A multiple voting shares.

Metro’s ownership stake in Couche-Tard has sat at almost 22 per cent since 2013, when it sold off about half its previous stake in the convenience store firm for about $479 million. — AGCanada.com Network

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Montreal-based Metro Inc. announced Tuesday it’s in “exclusive” talks with the Jean Coutu Group on the possibilities of a cash-and-stock takeover valued in some reports at around $4.5 billion.

A non-binding letter of intent calls for Metro, which operates over 600 grocery stores and 250 drugstores in Quebec and Ontario, to take up all shares of Coutu for $24.50 a share, of which 75 per cent would be paid in cash and 25 per cent in Metro shares.

The Coutu family, which holds control of the Jean Coutu Group, has “indicated its intention” to support the proposed deal, the companies said.

A deal, if completed, would give Metro a chain of 418 drugstores (as of March) operating under the PJC Jean Coutu, PJC Clinique, PJC Sante and PJC Sante Beaute banners, plus generic drug manufacturer Pro Doc, a Coutu subsidiary.

The proposed deal still depends on negotiation of “definitive agreements” which, if reached, would also be subject to the usual regulatory approvals. The two companies emphasized there’s “no guarantees” a deal will close.

Headquartered in the Montreal suburb of Varennes, the Coutu chain in recent years has pulled back from major U.S. expansion. It merged its U.S. stores into the Rite Aid drugstore chain in 2007 for 32 per cent of the expanded company, but sold off that stake in Rite Aid by July 2013.

Coutu’s franchised drugstores, which operate in Quebec, New Brunswick and Ontario, also include a significant confectionery and grocery component, dealing in beverages, snacks, frozen foods, baby foods and baked goods.

Metro sits with Loblaws and Empire Co. among the three largest Canadian grocery firms, with retail banners including Metro, Metro Plus, Super C and Food Basics and the Brunet, Metro Pharmacy and Drug Basics pharmacy chains.

Metro in 2013 also shed some minority investment outside its own chains, selling off about half its stake in convenience-store giant Alimentation Couche-Tard for $479 million while hanging onto a 21.8 per cent share.

Speculation has since loomed large that Metro would put the proceeds from that sale toward a play for the Coutu chain, and more so since online giant Amazon made its entry into the grocery business by buying U.S.-based Whole Foods Market.

Metro has also taken some steps into the online grocery business, starting last year with pickup and delivery in Montreal and expanding that service to Quebec City earlier this month.

Metro said Sept. 12 the online service “will continue to be deployed in various markets in the province and then be extended to Ontario.” — AGCanada.com Network

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Alimentation Couche-Tard, a major Canada-based chain of convenience stores and gas stations, said in August that it would buy the smaller CST, which has the Corner Store markets, for some US$4.4 billion.

As of late January, Couche-Tard had 8,081 convenience stores in North America, including 6,710 which sold fuel, the company said in a news release.

The FTC required the companies to sell 70 fuel stations with convenience stores to Empire Petroleum Partners in Arizona, Colorado, Florida, Georgia, Louisiana, New Mexico, Ohio and Texas, the agency said.

Empire also has the option to buy a gas station in Albany, Georgia, the FTC said.

Alimentation Couche-Tard, which is still seeking antitrust clearance in Canada, said in a statement that it expected the deal to close on June 28.

In Canada, the deal would give Couche-Tard up to 870 more retail sites, mainly under the Corner Store and Depanneur du Coin brands, in Ontario, Quebec and Atlantic Canada.

The CST stores offer standard convenience-store snacks and beverages and, in many cases, market sections with sandwiches, salads and fresh produce.

Some of CST’s Canadian retail sites and cardlock fueling stations, plus its commercial and home energy business, would go to Red Deer, Alta.-based Parkland Fuel Corp. in a C$965 million side deal with Couche-Tard.

The number of Canadian CST stores going to Parkland would be determined via the federal Competition Bureau’s review of the Couche-Tard/CST deal.

— Diane Bartz reports on antitrust issues for Reuters from Washington, D.C. Includes files from AGCanada.com Network staff.

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San Antonio, Texas-based CST is one of the largest publicly traded fuel retailers in North America and also controls the general partner of gas station company CrossAmerica Partners.

The company, spun off from Valero Energy Corp. in 2013, also operates convenience stores and gas stations in Canada.

CST’s Canadian operations include 870 retail sites, mainly under the Corner Store and Depanneur du Coin brands, in Ontario, Quebec and Atlantic Canada, offering standard convenience-store snacks and beverages and, in many cases, market sections offering sandwiches, salads and fresh produce.

“With this transaction we would strategically strengthen our positioning in both the “sun belt” and the east coast of North America,” Couche-Tard CEO Brian Hannasch said in a statement Monday.

The Sun Belt refers to the region that stretches across the southern and southwestern portions of the U.S.

Laval, Que.-based Couche-Tard will offer CST Brands shareholders $48.53 per share in cash, a premium of 2.15 per cent to the stock’s Friday close (all figures US$).

However, the offer represents a premium of 41.9 per cent to CST’s closing price on March 3, the last trading day before the company said it would explore strategic alternatives.

CST, which has been under pressure from activist investors JCP Investment Management and Engine Capital, said in March it would explore strategic alternatives.

Excluding debt, the deal is valued at about $3.67 billion, based on Thomson Reuters data. Montreal law firm Davies Ward Phillips and Vineberg, which represents Couche-Tard, described the CST deal in a separate release Monday as Couche-Tard’s biggest ever.

The deal also underlines the Canadian convenience store operator’s position as one of most acquisitive players in the industry. Davies noted Couche-Tard, with about 7,900 stores in North America, is already the continent’s No. 2 convenience store chain behind 7-Eleven.

In Canada, Couche-Tard’s stores operate under the Couche-Tard, Mac’s and Circle K brands. The company operates over 1,400 stores in 10 provinces and the Northwest Territories and supplies almost 400 affiliated stores.

Couche-Tard, which has made at least eight acquisitions since 2014, agreed in March to buy 279 Esso-branded fuel and convenience sites from Imperial Oil for about C$1.69 billion.

Couche-Tard also said Monday it would sell some Canadian assets of CST to Parkland Fuel Corp. for about C$965 million, after the deal closes, expected in early 2017.

The assets include CST’s cardlock fueling stations, commercial and home energy business, and a number of company-operated stores to be determined following the Competition Bureau of Canada’s review of the transaction.

Red Deer, Alta.-based Parkland said the deal would make it the top fuel retailer in Canada, with over 1,555 sites, add the Ultramar brand to its portfolio and create “critical mass” for Parkland in Quebec and Atlantic Canada.

Couche-Tard said it would fund the CST deal with available cash, existing credit facilities and a new term loan.

— Reporting for Reuters by Arathy S Nair in Bangalore. Includes files from AGCanada.com Network staff.

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San Antonio-based CST owns and operates convenience stores and gas stations in Canada and the U.S., and it controls the general partner of gas station company CrossAmerica Partners LP.

CST declined to comment.

In a statement Tuesday, Couche-Tard said it is in discussions “with third parties regarding possible business transactions.

“No formal agreements have been reached,” it added.

Laval, Que.-based Couche-Tard’s shares closed up 3.1 per cent, while CST’s stock ended the day 6.3 per cent higher.

The move highlights the level of consolidation in the convenience store sector and reinforces Couche-Tard as one of the most acquisitive players in the industry.

CST’s operations in Canada cover over 870 retail sites, mainly under the Corner Store and Depanneur du Coin brands, in Ontario, Quebec and Atlantic Canada.

Its Canadian stores’ offerings include standard convenience-store snacks and beverages and, in many cases, market sections offering sandwiches, salads and fresh produce.

Couche-Tard’s operations in Canada, meanwhile, are under the Couche-Tard, Mac’s and Circle K brands. The company operates over 1,400 stores in 10 provinces and the Northwest Territories and supplies almost 400 affiliated stores.

The news comes about two months after Reuters reported that Couche-Tard and Japan’s Seven + i Holdings Co. Ltd. had submitted offers to acquire CST.

The Wall Street Journal first reported that Couche-Tard was close to buying CST.

— Reporting for Reuters by Lauren Hirsch; writing by John Tilak. Includes files from AGCanada.com Network staff.

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