Official Valero Retail Spinoff of CST a Big, Hairy Deal
Published in CSP Daily News
Birth of Corner Store, trading of CST Brands commences after kickoff event; beards to follow (slideshow)
SAN ANTONIO -- At a kickoff event in front of the new headquarters, officials and employees celebrated the spinoff of refiner-marketer Valero's retail segment, launching CST Brands into the market as a separate entity and on the stock market as the industry's newest publicly traded chain.
Before a crowd of employees and media, Kim Bowers, president and CEO of CST, formally announced the spinoff of CST from San Antonio-based Valero Energy Corp., creating what could very well be the second-largest publicly traded fuel and convenience merchandise retailer in North America.
With approximately 1,900 sites in the United States and Canada and $13.1 billion in revenues last year, CST has long been focused on the penny-margin business of convenience retail, Bowers told CSP Daily News in an interview prior to Tuesday's event. She said the spinoff will help unlock the company's true value for shareholders and allow the CST team to focus on what they do best.
"At our core, we are a retail company focused on serving customers," said Bowers. "This move will allow us to benefit all the stakeholders. We will continue to grow our footprint, expand our signature food offerings, provide more opportunities for our CST team members and maximize profitability for shareholders. We are all extremely excited about the possibilities."
Bill Klesse, chairman and CEO for Valero Energy Corp., said, "This action demonstrates Valero's commitment to provide long-term value to our stockholders. With its strong management team in place, CST Brands is well-positioned to be a successful independent company. Following the separation, Valero is a more-focused refining, wholesale marketing and alternative fuels company."
Part of the new era would be a culture shift, CST officials said, moving from a more formal, corporate, refining sensibility to a more informal, retail environment. To help illustrate that direction, Henry Martinez, senior vice president of human resources for CST Brands wore a fake beard at this past Tuesday's kickoff event. Currently Valero has a policy of not allowing employees to have facial hair. CST officials intend to relax that policy.
CST's network of convenience stores throughout Canada and the United States offer a broad array of convenience merchandise, beverages, snacks and fresh food. In the United Sates, CST Corner Stores sell Valero fuels and products such as Fresh Choices baked and packaged goods, U Force energy and sport drinks, Cibolo Mountain coffee, FC Soda and Flavors2Go fountain drinks. In Canada, CST is the exclusive provider of Ultramar fuels and its Depanneur du Coin and Corner Stores sell signature Transit Cafe coffee and pastries.
Effective May 1, CST shares were distributed to Valero shareholders at a rate of one share of CST for every nine shares of Valero common stock held as of 5:00 p.m. EDT on April 19, 2013. Regular way trading of CST common stock was set to begin May 2, 2013. CST stock will be traded on the NYSE under the ticker symbol "CST."
In 2013, CST plans to build 15 new stores in the United States, adding to its network of more than 1,032 stores throughout Texas, Louisiana, Arkansas, Oklahoma, New Mexico, Colorado, Wyoming, Arizona and California. More than half of CST's U.S. Corner Stores are located in Texas, one of the fastest-growing states in the nation.
In Canada, CST sells Ultramar fuels through 848 retail sites in Quebec, the Atlantic provinces and eastern Ontario and is one of the largest retail distributors of home heating oil in Eastern Canada. The network includes 80 card-lock sites located along natural trucking routes or industrial parks that allow trucking and commercial fleets to buy fuel 24 hours a day. CST plans to build eight new company-operated stores and add 15 new dealer sites in Canada in 2013.
CST employs nearly 12,000 team members throughout the Southwestern United States and Eastern Canada, including 270 at the CST Customer Service Center in San Antonio, Texas, and 285 at the CST Service Center in Montreal, Canada.
CST intends to continue to focus on building larger stores from the ground up with ample parking, colorful and spacious design, and a variety of food options. In 2012, the company sold more than 4 million "kolaches" and 1.3 million "whoopie pies" baked fresh in its U.S. stores.
On May 19, CST is scheduled to open its largest store to date, a 10,100-square foot Travel Center with a Subway in Three Rivers, Texas, an area of population growth due to the recent shale-oil boom.
CST will also focus on community, giving back through volunteer work and philanthropic activity, officials said.
San Antonio-based Valero, through its subsidiaries, is an international manufacturer and marketer of transportation fuels, other petrochemical products and power. Its assets include 16 petroleum refineries with a combined throughput capacity of approximately 3 million barrels per day, 10 ethanol plants with a combined production capacity of 1.2 billion gallons per year, and a 50-megawatt wind farm. More than 7,300 retail and branded wholesale outlets carry the Valero, Diamond Shamrock, Shamrock and Beacon brands in the United States and the Caribbean; Ultramar in Canada; and Texaco in the United Kingdom and Ireland.