LAVAL, Quebec -- Exxon Mobil Corp.'s announcement that it will sell its U.S. retail operations could spell an attractive acquisition opportunity for Alimentation Couche-Tard Inc., according to a report by The National Post. Couche-Tard's management is seeking larger acquisition targets in fiscal 2009, analyst Sara O'Brien of RBC Capital Markets said in a note to clients cited by the newspaper, reiterating her outperform rating and price target of $19 on the Quebec-based convenience chain's shares.
"[A] competitive bid process means Couche-Tard will not be alone in bidding for the assets," [image-nocss] she wrote. "So far, ExxonMobil and ConocoPhillips have selected to parcel off packages of c-stores by region...we see Couche-Tard as holding a bargaining chip in offering to convert some of its Circle K branded gas to [the] seller's brand. In addition, Couche-Tard's reputation as solid operators delivering gas volume growth...will likely be considered in the bids."
In early May, Couche-Tard forged a deal with Saint John, New Brunswick-based Irving Oil to operate nearly 300 of Irving's Mainway and Bluecanoe convenience stores. The stores will be rebranded to one of Couche-Tard's retail identities, while the pumps will still offer Irving fuels. (Click here to view CSP Daily News coverage. Also,click here to read an interview with Couche-Tard CEO Alain Bouchard.)
O'Brien said she expects renewed investor interest in the retailer from potential deals, the report said; she added that the company's shares have been driven down due to lower gasoline margins and softer volume and could be a good defensive buy.
Irving, Texas-based ExxonMobil's ExxonMobil Fuels Marketing Co., Fairfax, Va., announced its intention last week to transition out of the direct-served (dealer- and company-operated) retail business in U.S. markets. This move will include the conversion of a majority of markets to branded distributor to build on the strength of its current distributor network. This transition will occur over a multi-year period, the company added. (Click here to view previous CSP Daily News coverage.)
Calgary, Alberta-based Imperial Oil Ltd., meanwhile, said that it has no plans to sell off the 700 Esso-branded gasoline stations it owns in Canada. Imperial is 69.6% owned by ExxonMobil. (Click here to view CSP Daily News coverage.)
Laval, Quebec-based Alimentation Couche-Tard currently operates a network of 5,690 c-stores, 3,440 of which include motor fuel dispensing, located in 11 large geographic markets, including eight in the United States covering 29 States and three in Canada covering six provinces.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.