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Part brand expansion, part refinery use and part planning for the future — Federated Co-operatives Limited (FCL) is looking to spend $264 million to buy 181 Husky gas bars, car washes and convenience stores from Cenovus in Western Canada.
FCL CEO Scott Banda said Tuesday it’s the largest acquisition in the company’s history, both in terms of dollars and number of sites.
“The acquisition aligns with FCL’s vision of building sustainable communities together, and reaffirms our commitment to Western Canada as we strengthen our position to meet the needs of local Co-ops and their communities for the future,” Banda said during a conference call.
Once the deal is finished, the locations will be transferred to local Co-ops.
“This will allow local Co-ops to grow into new geographic areas and increase service offerings in their communities,” said Banda.
Most of the new locations will be in Alberta and B.C., places where FCL’s presence isn’t as dense as Saskatchewan and Manitoba.
Many of the new locations will be moved over to the Co-op brand, according to Banda, but others will be kept as Husky for a while.
The acquisitions will increase the use of the company’s refinery in Regina and the ethanol plant near Belle Plaine, according to Banda.
“A part of that, when we look at the economics of this, is focused on our manufacturing facilities … We have capacity at our refinery that we’re not utilizing right now. This transaction moves us closer to full utilization of the site,” said Banda.
The CEO also said it will be good for Co-op members because increases in profitability are shared with them.
Banda said the deal will help “enhance profitability” and finance the investments the company has to make as it goes to adapt to the energy transition and “ensure that energy production is set for the next generation.”
FCL “aspires” to achieve net-zero carbon emissions by 2050, and recently announced a project to capture carbon emissions from its refinery and ethanol complexes.
The deal is about three years in the making — the properties first went on the market in 2019 — but it was disrupted by the pandemic. The $264-million price tag is expected to be fully paid for by cash FCL has on the balance sheet now.
Because the deal is so big, the Competition Bureau of Canada will have to review it. As a result, the closing of the deal isn’t expected to happen until midway through 2022.