On Thursday, BMO Capital Markets maintained its Outperform rating on shares of Alimentation Couche-Tard Inc (ATD/B:CN) (OTC: ANCUF), with a price target set at Cdn$89.00. The firm's analysis suggests that the revised acquisition offer from Couche-Tard for Seven & i Holdings reflects a 9x EBITDA multiple, which is seen as the upper limit on price by the Canadian convenience store operator.
The analyst at BMO Capital Markets highlighted the strategic efforts of Alimentation Couche-Tard in its bid to acquire Seven & i Holdings. The firm's sum-of-the-parts (SOTP) valuation estimates the enterprise value (EV) of Seven & i Holdings' convenience store segment at US$89 billion, with additional value attributed to its financial services and supermarket businesses.
In comparison, the revised offer from Alimentation Couche-Tard for the entire company of Seven & i Holdings is valued at an enterprise value of US$85 billion. According to BMO's assessment, this new offer is closer to the expected valuation range of Seven & i Holdings' Board, but it may still not meet their full expectations.
The commentary from BMO Capital Markets suggests that while Alimentation Couche-Tard has increased its bid, the offer might not be sufficient to secure a deal. The analyst's valuation implies that there is potential additional worth in Seven & i Holdings' other business segments that may not be fully accounted for in the current offer.
Alimentation Couche-Tard's pursuit of Seven & i Holdings is part of its broader strategy to expand its global footprint in the convenience store sector. The company's share price and future negotiations may be influenced by its ability to reach an agreement that aligns with the valuation expectations of Seven & i Holdings' Board.
In other recent news, Alimentation Couche-Tard reported an adjusted EBITDA of $1.14 billion and earnings per share (EPS) of $0.48, slightly below the consensus estimate of $0.50. Amid volatility, BMO Capital Markets maintained its Market Perform rating on the company's shares with a steady price target of Cdn$89.00.
The company's potential acquisition of Seven & i Holdings is under scrutiny, with firms like RBC Capital and National Bank Financial maintaining positive ratings on the company's stock due to potential synergies, especially in the United States.
However, CFRA lowered its 12-month price target for the company to C$80 from C$83, while maintaining a Hold rating. Despite a downturn in consumer behavior and the uncertain acquisition, Couche-Tard remains confident in managing its leverage ratio. These are the recent developments for Alimentation Couche-Tard.
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