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Holiday sale would create national chain of convenience stores

The Holiday station at the intersection of Midway Road and U.S. Highway 53 near Pike Lake is seen last Tuesday afternoon. (Clint Austin / caustin@duluthnews.com)

The acquisition of Minnesota-based Holiday Cos. will help the company that also owns Circle K to stake a claim as America's first truly national convenience store chain.

In a major shake-up of the local convenience store business, Holiday Companies confirmed last week that an agreement has been reached to sell the multibillion-dollar company to Alimentation Couche-Tard Inc., a Canadian company that also owns Circle K. The sale price was not disclosed.

The deal, which must still be approved by Holiday shareholders and federal regulators, would allow Circle K to expand into six new states. There would be Couche-Tard-owned stores in all but two states, well ahead of leading rival 7-Eleven, according to the National Association of Convenience Stores.

"We are pleased to entrust Couche-Tard with carrying forward the Holiday brand and our highly successful programs," said Ronald Erickson, Holiday chairman and CEO. "Our 90-year history and our promising future are being placed into excellent hands."

Couche-Tard executives praised Holiday as one of the "strongest, well-run" convenience store companies in the northern United States, noting that Holiday's 200 stores dominate the Twin Cities market, where the company has a market share of about 30 percent. The chain has more than 40 locations in the Northland.

Holiday stores typically generate sales that are twice the industry average for both food and fuel, according to Couche-Tard. Holiday operates a total of 522 stores in 10 states. The retail chain generated revenue of $2.6 billion in 2016, state records show.

When asked if the Holiday brand would survive the transaction, however, Couche-Tard officials were noncommittal. In a conference call with investors, Couche-Tard officials said no decisions have been made about changing the name.

"The Holiday brand is extraordinarily strong with high brand awareness in its geography," said Alex Miller, senior vice president, global fuels. "Our focus right now is to understand that brand and leverage that brand and grow the business."

If Couche-Tard — French for "night owl" — retains the Holiday brand, that would be a first, according to the National Association of Convenience Stores (NACS). In every other U.S. acquisition, Couche-Tard has brought new stores into the Circle K family, NACS spokesman Jeff Lenard said.

"There are benefits to having the same brand, in terms of how they roll out products and brand awareness," Lenard said.

While department store chains and other retailers have been pummeled by Internet-based operators, convenience store chains have remained popular with consumers, fueling a wave of recent acquisitions by both Couche-Tard and 7-Eleven, Circle K's main competitor.

"So far, convenience stores are not as affected, and the reason is that when somebody wants something, they want it now — not two hours from now, not two days from now," Lenard said. "That is very difficult for online retailers to replicate."

Founded by Arthur and Alfred Erickson, the company that evolved into Holiday has deep roots. The family started out in 1928 with a general store in Centuria, Wis. Its first gas station opened in 1939 in Lindstrom, Minn., according to the St. Louis Park Historical Society.

By the end of World War II, the family had invested in the Northwestern Refining Co. in St. Paul Park, and Elmer Erickson coined the store name "SuperAmerica," which became the gasoline stations of the refinery, according to the historical society.

In 1970, the family sold its refinery and all of its SuperAmerica stores, but some family members continued to operate gas stations under the Holiday brand, which was started in 1964.

The stores are a model of vertical integration, with franchisees required to purchase at least 95 percent of their fuel from Erickson Petroleum, a corporate affiliate that gets about 25 percent of its business from Holiday stores, state records show. Altogether, Erickson generated total revenue of nearly $2 billion in 2016, records show.

"I know this was a hard decision for them," said Stephen Linn, who operates seven Holiday stores in Minnesota. "They were emotionally attached to Holiday. But very few family members are active inside the organization."

Franchisees have been assured that Couche-Tard will continue to use Holiday's Bloomington headquarters, Linn said.

Linn said Couche-Tard first became familiar with Holiday by purchasing a large franchisee in Wisconsin.

"They clearly liked what they saw," Linn said. "They went in and bought the whole darn company."

Couche-Tard operates close to 14,000 stores in Canada, the U.S. and more than 20 other countries. It has operations in 42 U.S. states, with many stores using the Circle K brand name, and employs about 94,000 people in North America alone.

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