Convenience Retail Asia, a subsidiary of Li & Fung, has agreed to sell its Circle K convenience store business in Hong Kong to Canadian retailer Couche-Tard for HKD2,790m (US$360m).
Significant change in Hong Kong
CRA’s Circle K HK trades a network of Circle K-licensed convenience stores, with 340 company-operated sites in Hong Kong and 33 franchised sites in Macau. Circle K is the second largest convenience chain in Hong Kong. It is well established and has a long-standing history in the market, opening its first store in 1985.
Despite the pandemic, Circle K continues to perform strongly, maintaining strong momentum gathered in 2019. For the six months ended 30 June 2020, CRA’s total revenue grew 5.7% to HKD2,858m (US$368.5m) YoY. Circle K revenue for the half was up 7.9% to HKD2,858.8m YoY.
The deal marks a significant milestone for Couche-Tard, meeting long-standing ambitions to expand in Asia. Couche-Tard is likely to benefit from Circle K’s vast experience in trading in small formats in densely populated market. The transaction is expected to close by December 31, 2020. It will be subject to approval by CRA shareholders and regulatory clearances.
Comments from the leadership team
Alain Bouchard, Couche-Tard's Founder and Executive Chairman, said, "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 and have no doubt that together we can reach millions more customers in Hong Kong and across Asia as we move forward in our journey to become the world's preferred destination for convenience and fuel."
Brian Hannasch, Couche-Tard’s President and CEO, said, "Circle K Hong Kong is one of the best convenience store operators in Asia and will be an excellent fit within our company. We are excited to partner further with their highly advanced team in terms of innovation, loyalty, private label, retail execution and ability to grow market share. Upon closing of this transaction, Couche–Tard will reach a milestone in its strategic ambition of entering the high growth Asia–Pacific market with a first-rate management and operations team, which has the credibility, experience and capabilities to support future expansion in the region."
Victor Fung, CRA’s Chairman, said, "The Board fully endorses the sale of Circle K Hong Kong to our long-term partner and franchisor. This is a win-win for both companies. Our investors will gain from a good return on their investment and Couche-Tard will benefit from a first-class organization of dedicated and loyal team members who have contributed to the success of Circle K in Hong Kong."
Richard Yeung, CRA’s CEO, said, "We are very pleased to have reached this agreement with Couche-Tard. Having the brand owner directly involved in the business will create new opportunities for the brand and our staff. I am grateful to the management and employees of Circle K Hong Kong for their dedication over the past decades and am excited that they will be joining a multinational industry leader who shares our commitment to serving the local community."
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