On the rise
Alimentation Couche-Tard Inc. was higher on Monday after the Wall Street Journal reported it has had merger talks with British retailer EG Group.
According to the report, the Montreal-based convenience store operator has traded proposals in recent weeks that would value EG at approximately US$16-billion or more including debt.
The potential deal would create a convenience store giant, combining Couche-Tard’s more than 14,000 stores across the United States, Canada and Europe with EG’s over 6,000 locations across 10 countries.
“Back in September (Bloomberg), EG Group had been speculated to explore a sale so the merger talks with Couche-Tard are not a total surprise,” said Stifel analyst Martin Landry in a research note. “Separately, Elliott Investment Management, a US based activist fund manager, has written a letter to Suncor calling for a strategic review including the potential divestiture of 1,800 gasoline stations operated under the Petro-Canada banner. There are limited suitors for both these networks given their size and Couche-Tard is well positioned in our view. Our analysis suggests that a potential acquisition of EG Group could be accretive by 12-14 per cent and a potential acquisition of Petro Canada by 4-6 per cent. We believe ATD is interested in both assets and would view their acquisition positively.”