Parkland Buys M&M Food Market

Parkland (TSE: PKI), an Alberta-based convenience store and gas station giant, has signed a deal to acquire M&M Food Market.

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Parkland is present throughout Canada, the United States and elsewhere in the Americas and the Caribbean. In Quebec, it notably owns the Ultramar banner.

Expands Food Offer

With this acquisition, the Calgary-based fuel distributor gets its hands on more than 300 stores and more than 2,000 M&M Express outlets.

Led by an experienced management team with a proven track record of growth and a food-focused culture, M&M creates quality food options for customers to enjoy fresh frozen, on-the-go and on-the-go, and prepared from at home.

Parkland will leverage these capabilities across its existing network and will soon be launching standalone ON the RUN proximity locations.

The total consideration for this transaction is approximately C$322 million. It is expected to close in the first quarter of 2022.

Management Commentary

“This acquisition provides a platform to grow our food offer, expand our proprietary brands, and advance our digital and loyalty strategy,” said Ian White, SVP Strategic Marketing & Innovation.

“Consistent with our commitment to create convenience destinations, M&M’s national store network, and innovative approach to food preparation and menu development positions us to offer high-quality food that complements our growing quick-serve restaurant offerings. We will grow these capabilities in all our operating regions and bolster our digital connection to customers by combining M&M and JOURNIE™ rewards programs. We look forward to bringing ON the RUN and M&M together to help customers make the most of every stop.”

Wall Street’s Take

Last week, J.P. Morgan analyst John Royall kept a Buy rating on PKI and C$55 price target. This implies 61% upside potential.

Overall, analysts’ consensus is that PKI is a Strong Buy based on eight Buys and one Hold.

The average Parkland price target of C$50 implies 46.3% upside potential to current levels.

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