Li & Fung unit to sell 340 Hong Kong Circle K stores to Canadian convenience store giant ACT for US$361 million

Pearl Liu
·2-min read

Hong Kong conglomerate Li & Fung is selling 340 Circle K stores in the city to Canadian convenience store giant Alimentation Couche-Tard (ACT) for HK$2.8 billion (US$361 million).

Quebec-based ACT founded the Circle K brand in 1951, and it was brought to Hong Kong by Li & Fung in 1985. Currently, it is the second-largest convenience store chain in the city, behind only 7-Eleven, which is owned by Dairy Farm Group and has more than 900 stores in the city.

Convenience Retail Asia, the listed retail arm of Li & Fung, which operates Circle K Hong Kong, said anti-government protests last year and the ongoing coronavirus pandemic had forced it to review the business, whose target customers included tourists. In its interim report, released on August 13, the company said Circle K had seen “stagnation in profit” due to “the dramatic fall-off in store traffic due to Covid-19, particularly at locations in commercial and boundary transit hubs, which forced the group to cut around 10,000 operating hours”.

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Hong Kong retail sales as a whole fell 12.9 per cent year on year in September, their 20th month of declines, as the pandemic continued to slam the brakes on spending and tourism arrivals.

Total sales at Circle K, however, still rose 7 per cent year on year in the first half of 2020 to HK$2.36 billion, under difficult retail and economic circumstances, Convenience Retail Asia said.

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“Circle K Hong Kong is one of the best convenience store operators in Asia,” Brian Hannasch, ACT’s president and chief executive, said on Thursday. “[The company] will reach a milestone in its strategic ambition of entering the high-growth Asia-Pacific market.”

All net gains from the sale will be delivered as a special cash dividend of HK$3.85 per share, Convenience Retail Asia said. Its shares rose 17.6 per cent and closed at HK$4.8 on Thursday following the announcement.

The company also said its other businesses, such as bakery brands Saint Honore and Mon cher and glasses retailer Zoff, were more suitable to the current retail environment, as they could go online easily and relied less on tourists.

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