While Canadian convenience store giant Alimentation Couche-Tard (TSE:ATD) has been eagerly trying to acquire 7-Eleven from Seven & i for some time now, the deal process has been going somewhat slowly. However, Seven & i investors are beginning to support the idea of an acquisition. As a result, shares were up modestly in Wednesday morning’s trading.
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Reports note that Seven & i’s internal plan to restructure its operations is regarded as “too little, too late” by Artisan Partners International Value Team, and the plan was really only undertaken to fend off Couche-Tard’s attempt at a buyout. The shareholder believes that the board of Seven & i should be working to negotiate with Couche-Tard and get a price that “maximizes shareholder value.”
Seven & i’s attempt to separate itself into two separate businesses and offer Couche-Tard one of these is not being well received by investors. In fact, Artisan Partners pointed out that Couche-Tard was offering a much better price than that represented by “…the speculative value that could potentially be achieved by implementing the restructuring plan at this late date.”
Already Improved Once
The interesting issue here, meanwhile, is that Couche-Tard has already improved its offer once. Couche-Tard is clearly interested in picking up 7-Eleven; after all, Couche-Tard’s initial offer was rebuffed once already, and when it came back with another 20% on top of that, it should have drawn a lot more notice.
Instead, Seven & i is launching on some half-baked reorg that looks to serve little purpose but fend off Couche-Tard. With the shareholders themselves starting to cry foul, though, it remains to be seen just how long Seven & i can hold out.
Is Alimentation Couche-Tard Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on TSE:ATD stock based on nine Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 1% decline in its share price over the past year, the average TSE:ATD price target of C$87.70 per share implies 18.88% upside potential.
