The Caisse de dépôt et placement du Québec is selling a $700-million stake in Alimentation Couche-Tard Inc. back to the Canadian convenience store giant through a private share buyback agreement, recouping cash that the pension fund manager plans to reinvest in the province.
Couche-Tard will pay $80.50 per share to buy back 8,695,652 shares from the Caisse, which is a 3-per-cent discount to the stock’s closing price on July 22. The shares changing hands make up about one-fifth of the Caisse’s interest in Couche-Tard, which was worth more than $3.4-billion when markets closed on Monday.
Once the transaction is complete, the Caisse will still own nearly 32.8 million shares in Couche-Tard, or a 3.5-per-cent stake worth about $2.8-billion.
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The Montreal-based pension fund manager periodically trims its exposure to some of its largest stockholdings, several of which are major Quebec companies such as Couche-Tard, engineering consulting firm WSP Global Inc. and business consulting company CGI Inc. But it typically does so in a highly choreographed manner that emphasizes its continued support for the companies.
The buyback deal was prompted by the Caisse’s “periodic portfolio rebalancing,” the two companies said in a joint news release. The Caisse’s head of Quebec, Kim Thomassin, said of Couche-Tard that the pension fund manager has “been a partner of the company for nearly 30 years, and we will continue to support the expansion of this international leader.”
Couche-Tard’s shares have performed well of late, with the stock price up 5.9 per cent over the past month. The company’s share price was relatively unchanged as of midday on Monday on the Toronto Stock Exchange.
In similar transactions in May, labelled as portfolio rebalancing efforts, CGI agreed to buy back nearly 2.9 million of its shares from the Caisse at a discount for proceeds of about $400-million, and the pension fund sold nearly 2.9 million shares in WSP for $600-million through a block trade underwritten by National Bank Financial Inc. and CIBC World Markets Inc.
Ms. Thomassin also said the Caisse plans to reinvest the proceeds from its transaction with Couche-Tard “in other companies in Quebec.” As a pension fund with a dual mandate to earn returns for members while also supporting the province’s economic development, its support for prominent Quebec companies is closely watched. Chief executive officer Charles Emond has set a target to increase the pension fund’s assets in the province to $100-billion by 2026, from $88-billion now.
Mr. Emond said in an interview earlier this year that he regularly tells the CEOs of the Caisse’s portfolio companies that “what matters is not so much how much we own” of the company’s shares, but rather “what we can do next time. ... We will be there for you for the next big trade.”
Couche-Tard will buy back the shares using cash on hand, outside of its normal course issuer bid, with permission from the Autorité des marchés financiers to buy the stock at a discount. The company had previously received permission to buy back up to 78 million shares by April 30, 2025, but has not yet made any repurchases under that bid.
“This transaction is consistent with our opportunistic approach regarding our share repurchase program and broader capital allocation priorities and represents a distinct opportunity to create shareholder value,” Couche-Tard chief financial officer Filipe Da Silva said in a statement.