Article Date 02/12/2019

Image from : Maike Elan/Bloomberg files

Alimentation Couche-Tard's mega $7.7-billion fuel station bid has investors filling up on stock

Source The Financial Post

Alimentation Couche-Tard Inc., North America's largest convenience store owner, chalked up its highest stock price this week as solid quarterly results combined with a takeover bid for Asian expansion.

The Laval, Quebec-based company has made a $7.7 billion proposal - its largest ever - to buy Caltex Australia Ltd., which has 800 fuel stations and shops. Couche-Tard this week reported second quarter profit rose 21.5 per cent to US$579.4 million compared with US$477 million a year earlier.

Same store sales in the U.S. expanded 3.2 per cent among its Circle-K brand outlets, beating some expectations. Couche-Tard has some 9,800 convenience stores in North America and thousands more from Scandinavia to New Zealand.

The stock hit an all time high of $44.50 on the Toronto Stock Exchange Nov. 28 before easing to $43.88 on Friday, showing how analysts and investors are backing the giant retailer's plans.

"The acquisition, if consummated, would bring Couche-Tard into a new geography and serve as a platform for further expansion into the Asia-Pacific region," Mark Petrie and Krishna Ruthnum, analysts at CIBC in Toronto, wrote in a Nov. 28 report. The duo raised its target price on the stock to $50 and kept its outperformer rating.

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