Convenience store powerhouse Alimentation Couche-Tard continued along its consolidation path with today’s announcement of a deal to acquire NYSE-listed fuel and convenience store retailer CST Brands, Inc. in an all-cash deal valued at about USD$4.4B. San Antonio, Texas-based CST Brands, Inc. is one of the largest publicly traded companies of its kind in the United States and has a branch network of about 2,000 stores situated across the United States and Canada; the majority of which are in Texas, Quebec, and Atlantic Canada. Today’s announcement comes just five months after Couche-Tard agreed to buy 279 ESSO-branded fuel and convenience store locations from Imperial Oil Ltd. for about CAD$1.7B in March of this year. Talk about busy!
Analysts and investors cheered the move, sending Couche-Tard’s B-shares up nearly 7.5% to close at CAD$66.78.
I first (and briefly) mentioned Couche-Tard on this blog back in December last year (shortly after its Topaz acquisition:Watching: Alimentation Couche-Tard ) and while I was impressed at how management was operating the business and successfully integrating acquisitions, I was still wary of the growth by acquisition strategy (despite operating in a large fragmented market like convenience stores), and was waiting for a pull-back in its B-shares before I could really see this as a stock to own for the long-haul.
Well, the pull-back did arrive and those investors who went long the stock at around CAD$52.20 towards the end of June 2016 are looking at a pretty sweet gain of 28%.