A third wall for a knob

For the third time in five years, the Pigout-Tard food group has just hit a wall by being unable to complete ever greater transactions in terms of costs, scope and possible integration. Did A Couche-Tard, which long counted on the realization of improbable acquisitions to become the giant that we know today, lost the touch that has made its success for 45 years?

This is a bit like the question that can be asked with the new setback that has just suffered from Couche-Tard, which has decided to withdraw its proposal to acquire the Japanese conglomerate Seven & I Holdings, owner of a chain of 85,000 stores in the world, mainly convenience stores 7-Eleven, in a transaction valued at 46 billion US.

Although the outcome of this public purchasing offer (OPA) launched last August by Couche-Tard inevitably seemed to be dedicated to failure, as the management of Seven & I refused to collaborate in the negotiation process, we continued to maintain a thin hope because Cithe-Tard often showed in the past of a holy patience which was later rewarded.

This was not the case in this last negotiation, where both the management of Seven & I and the family who holds a large block of shares wanted to participate in a minimum way in carrying out a transaction.

Wasn’t Conoute-Tard lacked transactional sensitivity by attacking this acquisition of such a scale-which would have been the largest ever made by a Canadian company-and especially a company established in Japan, a country that has no tradition to share the property of its companies with foreigners?

Certainly, this is the third major transaction attempt that Couche-Tard has just missed in the past five years.

In 2019 and following an escalation in 2020, Couche-Tard tried to acquire at a price of 7.7 billion CAN in Caltex, the largest network of service stations and Australian convenience stores with 2,000 sites. A transaction that aborted in the troublemaker’s disorder.

In January 2021, Couche-Tard wanted to acquire the French group Carrefour and its 12,300 businesses of different sizes in Europe in a transaction valued at 25.5 billion CAN. The French authorities have opposed it, invoking a threat to the food sovereignty of France.

And we do not take into account the attempt at Tarpard to acquire the chain of Speedway Speedway in the United States at 18 billion in the United States which was the subject of an US 21 billion bid by Seven & I Holdings which won the bet…

Black series and opportunities

Let us recall that between time, Couche-Tard successfully achieved, in March 2023, the acquisition of 2,200 convenience stores and service stations of the Totalnergies group in Europe, but in a transaction of significantly lower value of 4.5 billion CAN, compared to the 7.7 billion expected for Caltex, the 25.5 billion for Carrefour or the US 46 billion for Seven & I Holdings.

However, we should not worry about the black series that has just crossed A-Totard in its various attempts to continue the strong growth that has always characterized the company’s journey since its foundation, 45 years ago.

“A Couche-Tard has no choice, its acquisitions must have an impact on the results of the company and that they are always larger and daring, but there are fewer opportunities in the market,” observes Professor Louis Hébert at HEC Montréal, specialist in international mergers and acquisitions.

According to him, the withdrawal of the transaction with Seven & i Holdings that has just announced Cithe-Tard could prove to be an excellent short-term decision.

“The management and the family that control the company will have to deliver what they have promised. The title will be affected (he lost 10 % on Thursday) and Cithe-Tard has made many allies with institutional funds in Asia who wanted changes, A-Tard-Tard could very well come back to the charge, “said Hébert.

What has already occurred in the past when Couche-Tard has missed opportunities, the company did not hesitate to reformulate a new proposal two years later to win the bet this time and make a more important transaction than that initially projected.

Until then, Couche-Tard will have to continue to consolidate the market in North America and Europe by making smaller transactions while maintaining a watchful lookout in the markets of Asia and Australia where the Quebec group wishes to set up its commercial imprint more.

Stronging a wall is not a drama in itself is to find the way that will allow us to get around it that is important, and in this regard, A-Tard Douche displays a rather impressive and even reassuring history.