Couche-Tard’s Pursuit of 7-Eleven Is Still On!

• Acquiring Seven & i would accelerate Couche-Tard’s global expansion and cement its position as a dominant force in convenience retail.
• The stalled management buyout by Itochu and the Ito family presents an opportunity for Couche-Tard to re-engage.
• Strong financial performance and a history of successful integrations position Couche-Tard as a capable acquirer for this landmark deal.

A Rare Opportunity for Global Scale

Alimentation Couche-Tard (TSX:ATD) has spent years establishing itself as a leader in the convenience store sector, with $73 billion in its most recent fiscal year. The company has close to 17,000 stores globally, with a presence in 31 countries and territories.

Despite its dominant presence across North America and Europe, the company sees further growth potential in Asia, and acquiring Seven & i, which owns 7-Eleven, could provide the perfect entry point for the business.

Seven & i operates over 85,000 stores worldwide, and its business model aligns well with Couche-Tard’s expertise. However, Japan has traditionally been a challenging market for foreign acquisitions.

Couche-Tard previously offered $47 billion for the convenience store giant, but instead, the Ito family and Itochu Corp. opted to try and take the company private. However, with the management buyout facing internal conflicts, Couche-Tard has an opportunity to advance discussions and potentially finalize a deal.

A Stronger Retail Giant

Couche-Tard has a track record of successful acquisitions, integrating brands like Circle K and Statoil to enhance its global footprint. With the Japanese government’s designation of Seven & i as a “core” business, regulatory scrutiny will be a challenge, but Couche-Tard’s extensive experience in cross-border deals positions it well for negotiations.

Beyond Japan, acquiring Seven & i would strengthen Couche-Tard’s presence in the U.S., where 7-Eleven dominates the convenience store sector. A successful acquisition would not only increase Couche-Tard’s store count but also bring new supply chain efficiencies, greater pricing power, and a more diverse revenue stream. The end result could be much stronger top and bottom lines for the business, and some significant long-term returns for investors.

A Compelling Case for Shareholders

Couche-Tard’s stock currently trades at 19 times earnings, a reasonable valuation given its consistent revenue growth and operational efficiency. A well-structured deal could create long-term value for shareholders by boosting earnings and expanding the company’s market reach.

While regulatory hurdles remain, Couche-Tard’s persistent interest in Seven & i underscores its confidence in the strategic fit. For investors seeking exposure to a disciplined, growth-oriented retailer with a strong acquisition track record, Couche-Tard’s pursuit of this deal is a move worth watching.

Over the past five years, Couche Tard’s valuation has risen by around 65% as it has been one of the best Canadian growth stocks on the TSX.