Couche-Tard deal for Cumberland would make strategic sense, analysts say

Skip to Content News Archives Economy Defence Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Defence Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Defence Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomeNewsRetail & MarketingCouche-Tard deal for Cumberland would make strategic sense, analysts sayCouche-Tard and Cumberland have held talks on and off for yearsAuthor of the article:Last updated 13 minutes ago A Couche-tard sign is seen in Montreal, Quebec on January 13, 2021. Photo by ERIC THOMAS/AFP via Getty ImagesCanadian convenience store operator Alimentation Couche-Tard Inc. made a new bid to acquire Cumberland Farms Ltd., according to the London-based Times, and analysts say such a deal would make sense.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe British newspaper reported Saturday that Couche-Tard, owner of Circle K and other brands, made an offer that would value Cumberland Farms at between US$7.5 billion and US$8 billion. The Quebec-based company has hired Royal Bank of Canada for advice, according to a person familiar with the matter, speaking on condition they not be identified.This advertisement has not loaded yet, but your article continues below.Couche-Tard and Cumberland have held talks on and off for years. In 2022, the they exchanged proposals on a deal that would have valued Cumberland, formerly known as EG Group, at about US$16 billion including debt, The Wall Street Journal reported back then.Breaking business news, incisive views, must-reads and market signals. Weekdays by 9 a.m.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Posthaste will soon be in your inbox.We encountered an issue signing you up. Please try againCumberland Farms, owned by TDR Capital and billionaire brothers Mohsin and Zuber Issa, filed for an initial public offering in New York earlier this year seeking a valuation of US$9 billion. The company, which operated over 3,200 sites in the U.S. and Europe as of March, aimed to raise about US$1 billion to repay debt.The Financial Times reported earlier this month that the IPO was delayed amid takeover interest, including from Stonepeak Partners LLP.A deal at that price for Cumberland “would be consistent with Couche-Tard’s objective of making disciplined, accretive acquisitions” with a focus on the U.S. and European markets, RBC Capital Markets analyst Irene Nattel said in a note published Sunday.If the offer is below the IPO valuation, the pre-synergies transaction multiple would be in the range of about 10 times adjusted earnings before interest, taxes, depreciation, and amortization, she wrote, adding that it would be similar to the multiple Couche-Tard paid for CST Brands in 2017.This advertisement has not loaded yet, but your article continues below.“We view this as an attractive deal with the potential for strong synergies, particularly in the U.S.,” National Bank of Canada analyst Vishal Shreedhar said in a note, adding that Cumberland’s potentially higher mix of non-fuel business would “be favorable to Couche-Tard, given higher and less-volatile margin structure.”Couche-Tard, which operates more than 17,200 stores globally, made a deal in July to acquire Poland’s Żabka Group SA for US$8.7 billion. Żabka executives and private equity owners, including CVC Capital Partners and Partners Group, are backing the offer. Together, they hold around 57 per cent of the retailer’s shares. It’s still not clear what proportion of the remaining shareholders will tender their shares.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.