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    Couche-Tard CEO: Pantry Acquisition Not In the Cards

    However, the chain plans to add 200 to 300 stores to its U.S. portfolio this year.

    By Linda Lisanti

    LAVAL, Quebec, Canada -- In an exclusive interview with CSNews Online, Alimentation Couche-Tard Inc. chairman, president and CEO Alain Bouchard refuted the recent speculation that his company -- known for its appetite for acquisition -- is eyeing North Carolina-based c-store chain The Pantry as its next target.

    Media reports published earlier this month, citing analysts, said poor performance by Sanford, N.C.-based The Pantry and the company's resulting diminished stock price have made it a target for purchase by Laval, Quebec-based Couche-Tard.

    The Pantry currently operates 1,645 c-stores in 11 states, while Couche-Tard operates a network of 5,615 c-stores across nine large geographic markets, including six in the United States covering 29 states and three in Canada covering six provinces. Both companies have been aggressive "consolidators" in the industry over the past several years.

    While acknowledging that The Pantry's southeastern U.S. stores would be a good geographic fit for Couche-Tard's southeastern Circle K region, Bouchard dismissed the possibility of such a deal, as it does not fit the company's stringent financial criteria.

    "Certainly, geographically, it's an extraordinary fit," Bouchard explained. "Other than that, for us, it has to be profitable with the right returns, and those guys are good operators. They are lean. We don't see much synergy in buying The Pantry."

    In an effort to trim costs by $6 million and offset lower gasoline margins, The Pantry recently announced a restructuring, including the release of 60 employees, mostly district managers and regional vice presidents based outside North Carolina. The layoff announcement came along with the company's warning that its 2007 fiscal year and its fourth quarter fiscal 2007 are expected to be impacted by lower gasoline margins.

    Although that acquisition is not in the cards, Bouchard told CSNews the chain does plan to purchase 200 to 300 stores this year to add to its U.S store count. Its acquisition strategy follows two routes -- the first is tuck-in acquisitions in the markets where Couche-Tard already has a presence, so it's easy to add a 10- or 20-store chain to that division. "These are very synergistic, very profitable for us," he said. The other is entry into new markets where the company has yet to make its mark.

    "We are buying the good assets," Bouchard said. "I have shelves full of books that come from the merchant bankers telling me I should buy this and buy that. But it's not about store count, it's about the quality. We are very disciplined."

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