Management at Metro Inc. sure knows how to time the market.
For years they've sat on their block of Alimentation Couche-Tard Inc. shares, leaving everyone to wonder when, or if, they'd ever sell.
On Tuesday the answer finally came.
After the market closed, Metro announced a $479-million bought offering of Couche-Tard's common shares priced at $47.90. That's a 2.2 per cent discount to Tuesday's close, but really, who cares. In one year, Couche-Tard's shares shot up a stunning 64 per cent and since 2008 they're up 190 per cent.
Just prior to the offering, Metro valued its stake at about $1-billion. At the end of fiscal 2011, it was worth about $600-million; the year before that, $492-million. In about two and a half years, the shares added about $500-million of value.
To figure out Metro's book value for the Couche-Tard shares, you have to go a long way back to the original deal when the grocer sold Couche-Tard its convenience stores in return for shares, but in 2005 Metro said its book value for the shares was about $75-million. (The market value at the time was $390-million.)
So yes, Tuesday's deal is smart timing.
Metro's remaining Class A multiple voting shares will be converted into Class B shares and the bought deal will unload about 48 per cent of the grocery chain's stake in Couche-tard.
BMO Nesbitt Burns led the offering, with National Bank Financial and TD Securities helping out. Unlike a regular bought deal, this offering does not require a prospectus and will close in three days because Metro's shares do not amount to a control stake in Couche-Tard. The quick turnaround allows the underwriters to count the big offering in their first-quarter numbers.
(Tim Kiladze is a Globe and Mail Capital Markets Reporter.)