Alimentation Couche-Tard (ATD) has offered up to US$8B for Cumberland Farms, well below its targeted IPO valuation of ~$9B - which was pulled due to challenging market conditions. The deal would expand the store network by ~20%…

… with a highly similar gross profit mix (fuel and merchandise).

In fuel, the margin profile of both firms is comparable…

… while the merchandising business could have upside if Couche-Tard is able to apply its existing playbook in a deal scenario…

… which the company has proven repeatedly, with a long track record of sub-9x EBITDA deals that target synergies of 30-60% of acquired EBITDA post-close.

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