The deal between Canadian convenience store giant Alimentation Couche-Tard (TSE:ATD) and its close Japanese equivalent Seven & i is carrying along, though there are some growing concerns that need to be addressed in short order. But things are looking a bit more positive, and this is giving Couche-Tard an edge in trading, up fractionally in Tuesday morning’s sessions.
The newest concern out of Seven & i, parent company of 7-Eleven, is that Couche-Tard is understating the risks of getting slapped with antitrust suits in its takeover proposals. Seven & i calls the deal a “..transformational cross-border acquisition….” that involves a lot more in the way of regulatory interest than previous deals.
This is prompting serious concern at Seven & i, who asserts that it will not make a deal that will ultimately produce a “…value destructive limbo…” state for several years. Couche-Tard, for its part, notes that it has already worked with the United States on several occasions to produce deals, and has received approval on several occasions. This is one of those frustrating occasions where both sides are right; Seven & i is correct in saying this is a far bigger deal than normal, but Couche-Tard makes sense that the current regulatory environment is likely to be a lot less restrictive than, say, Lina Khan’s tenure.
No NDA After All, Kind Of
Meanwhile, Couche-Tard also rolled out some other news around a potential deal with Seven & i. It released word that earlier reports that a non-disclosure agreement had been signed between the duo were in error, and there was no such agreement in place. But it did clarify that there were NDAs being signed by potential buyers, which may be where the mistake occurred.
Either way, it looks very much like a deal is getting up and running, and 7-Eleven stores in the United States may have a new operator in the somewhat near future. Once, of course, Couche-Tard finds a buyer for at least 2,000 of its United States stores lest even a relaxed antitrust environment come back to bite the deal.
Is Alimentation Couche-Tard Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on TSE:ATD stock based on 12 Buys assigned in the past three months, as indicated by the graphic below. After a 12.29% loss in its share price over the past year, the average TSE:ATD price target of C$85.92 per share implies 22.08% upside potential.
