Canadian convenience store chain Alimentation Couche-Tard (TSE:ATD) has been actively pursuing 7-Eleven branches throughout North America for a long time now. But that road may have come to an end, at least for now, as parent company Seven & i may have found just the trick to dodge the Canadian convenience store juggernaut. Investors took it oddly well, though, and sent shares surging over 3% in Thursday morning’s trading.
The owner of 7-Eleven, Japanese company Seven & i, announced that it was splitting off its North American operations from its Japanese operations. Apparently, the company noted, the North American 7-Elevens—which are a night-and-day difference from Japanese 7-Elevens as it stands—would be better off if they were more “independent” operations, reports noted.
But in the move that means something to Couche-Tard, Seven & i sold off its superstores, and several other businesses, to Bain Capital. This will in turn allow Seven & i to focus on the convenience store business. Seven & i will also be buying back some of its own stock, shelling out $13 billion to do so over the next five years. And, by the second half of 2026, the North American 7-Eleven operations would be separately listed on a North American stock exchange.
Surrender or Area Denial?
So what does this mean for Alimentation Couche-Tard? Couche-Tard was interested in buying up the whole 7-Eleven operation, even the Japanese part. But the Japanese did not much like that notion, even reaching the point where it was considered a national security issue. Convenience stores, as it turns out, could be useful places for the government to drop off food rations in a disaster.
But with the North American arm split off, Couche-Tard could easily just buy that arm out once it is independently listed, and get what it was after all along. There may be a delay, after all; the North American stores will not be successfully spun off for a few months, if not nearly two years. But at the end of that path, Couche-Tard could likely make an offer for the North American operations, and get what it was after all along.
Is Alimentation Couche-Tard Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on TSE:ATD stock based on seven Buys assigned in the past three months, as indicated by the graphic below. After a 12.66% loss in its share price over the past year, the average TSE:ATD price target of C$88 per share implies 19.96% upside potential.
