09:30 AM EDT, 08/20/2024 (MT Newswires) -- Stifel GMP on Tuesday reiterated its buy rating on the shares of Alimentation Couche-Tard ( ANCTF ) and its C$86.00 price target after the global gas-stop and convenience operator said it is mulling the acquisition of the Japanese owner of the 7-Eleven convenience-store network.

"ATD approached Seven & I Holdings (3382-JP) for a potential takeover of the entire company. Seven & I Holdings (S&I) is the leading convenience store operator in the U.S. with an estimated market share of 10%. S&I also has a leading share of convenience stores in Japan and franchisees/licensees across Asia. The announcement comes as a surprise, especially given the size of the potential transaction in relation to Couche-Tard as it would more than double Couche-Tard's EBITDA. A rough calculation would suggest that EPS accretion would be limited without synergies but that post-synergies the accretion could exceed high-teens percentages. While the strategic rationale appears sound, we have limited visibility on how Couche-Tard could finance such a transaction, as the purchase price could reach US$40 billion, excluding existing debt. Hence, this announcement could bring near-term uncertainty to shareholders, leaving the shares range bound with potential for near-term weakness," analyst Martin Landry noted.

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