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    Couche-Tard Anticipates $200M in Synergies From Statoil Deal

    LAVAL, Quebec -- Alimentation Couche-Tard Inc.'s acquisition of Statoil Fuel & Retail (SFR) is already turning into good news for the company.

    Couche-Tard made the acquisition official in June, when 97 percent of SFR shareholders threw their support behind the deal. Couche-Tard is paying $2.679 billion for the large convenience store chain with stores in Scandinavia, Poland, Russia and other eastern European countries.

    Couche-Tard revealed on Friday, Oct. 5, that it expects to realize $200 million (US) in synergies from the acquisition. In addition, the Laval, Quebec-based convenience retailer said it can reduce Statoil's working capital by $150 million, according to Martin Landry, vice president, research analyst - special situations at GMP Securities LP.

    No timeline was provided by Couche-Tard and no additional details were given as to how the company intends to achieve these synergies, Landry said. However, management confirmed that these synergies were operational in nature and did not include Couche-Tard's favorable tax rate or its attractive financing terms.

    Landry said the company is expected to give more details when it reports its second-quarter 2012 results at the end of November.

    "We were favorably surprised by the [US $200 million] expected synergies from SFR as we had modeled [US $50 million] in our FY2014 forecasts. Hence, this represents a significant upside from our expectations," Landry said. "Given management's excellent track record at integrating acquisitions and extracting synergies, in particular with the Circle K acquisition, we have confidence that the company will succeed and reach its ambitious goal of [U $200 million]."

    Landry added that GMP Securities is increasing its forecast to reflect the higher synergies than expected. "Our forecasts now reflect roughly [US $35 million] of synergies for FY2013 and [US $65 million] in FY2014, for a combined [US $100 million] within two years," he said. "We expect Couche-Tard to realize the remaining synergies in FY2015, outside of our forecast period."

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