Couche-Tard (ATD) found a home for some of its previous Seven & i budget, announcing an $8.6B bid for Poland-based Zabka Group on Friday - which values the target at 7.5x EBITDA after synergies…

… and represents a meaningful expansion in ATD’s store network.

Should the deal get over the finish line, Couche-Tard’s revenue mix will shift meaningfully towards Europe and convenience stores…

… which are more profitable and less volatile than the company’s fuel business (a recent source of strength given the geopolitical backdrop)…

… providing ample cash flow for de-leveraging, with management expecting to return from 3.0x post-close to sub-2.5x within two years.

About Bullpen: Bullpen Finance Inc. publishes content on Canadian markets and provides paid research coverage of select Canadian issuers. Bullpen is paid in cash by covered issuers, does not accept stock or options, does not hold positions in covered securities, and does not conduct investment banking business. Bullpen and LodeRock Advisors Inc. are affiliated; LodeRock provides investor relations services to issuers, some of whom are covered by Bullpen Research. When a post discusses a covered issuer, a specific disclosure appears at the top of the post. This post is published for general information purposes. It is not personalized investment advice and is not tailored to any individual reader’s circumstances. Bullpen is not a registered investment adviser or dealer. For full disclosures, including analyst certification, jurisdictional statements, and conflict of interest policies, please see our Legal & Disclosures section on our website.

You might be interested in…