Analysts: Couche-Tard Deal With Statoil Makes Lots of Sense
Stock analysts also made positive statements about the Quebec-based convenience store chain, known for its Circle K stores in the United States.
Perhaps most positive about the transaction was Martin Landry, GMP Securities LP analyst. This morning, he maintained his "buy" recommendation on Couche-Tard's stock. The analyst added that although the acquisition still needs shareholder and regulatory and regulatory approval, he said he felt comfortable about the success rate of the proposed offer.
Landry added that he believes the transaction can be completed by the end of June.
If the $2.8 billion deal is approved, Couche-Tard will acquire the Stavenger, Norway-based company's 2,300 convenience stores, spanning Scandinavia and central and eastern Europe, including the growing markets of Poland and Russia.
The ability for future growth in Europe was one reason Landry is so bullish about the proposed transaction. "Statoil's large and well established network, combined with its powerful brand image will provide Couche-Tard with a platform for future growth," he said.
According to Landry, Statoil's network is so well established that it has c-store market leadership positions in five of the countries it operates. "It's brand name is well established among Scandinavians," the analyst remarked.
Financially, the deal definitely makes sense, Landry continued. GMP Securities predicted the Statoil acquisition could add roughly $100 million annually to Couche-Tard's bottom line immediately once the deal closes.
Danske Bank analyst Endre Storlokken agreed Couche-Tard's acquisition made sense. But the analyst told the Wall Street Journal that the deal also makes sense from Statoil's perspective. "Operationally for Staoil, this has not that great an importance," he told the news outlet. "But it's positive that this happens; it frees up capital [for Statoil]."
Christine Decarie of Investors Group told Canada.com that she was not surprised that Couche-Tard made a move, but was surprised by the scale of the transaction. "I knew they were looking [to make a purchase], but I was not expecting that size," she told the news source. "That came out of nowhere. In recent years, they'd mostly been buying smaller networks. This could give [the stock price] a bit more juice, especially since it's significantly accretive to earnings."
The one exception was in 2010, when Couche-Tard attempted a hostile takeover of Casey's General Stores Inc. However, Casey's rejected Couche-Tard's reported approximate $2 billion offer as too low and ultimately fended off the takeover attempt.