BMO Capital has maintained its Outperform rating on Alimentation Couche-Tard Inc (ATD/B: CN) (OTC: ANCUF) with a steady price target of Cdn$89.00. The firm's analysis suggests that a potential transaction by the company could involve substantial financing, including an estimated US$13 billion in debt and US$29 billion in equity, which may result in a 50% dilution of current shares.
The analyst from BMO Capital highlighted that while there might be significant overlap in several U.S. states, raising the possibility of anti-trust concerns, the full extent of the synergies, especially from the Japanese market, remains uncertain. The firm noted that while there could be potential benefits in food offerings, the deal—if it goes through with Alimentation Couche-Tard acquiring and retaining the complete convenience store business of the target—would bring considerable leverage and equity dilution.
The commentary from BMO Capital underscores the complexity of the potential acquisition, pointing out the financial risks associated with the transaction. The firm's stance reflects careful consideration of the balance between the financial burden of the deal and the prospective advantages that could be realized through strategic synergies.
Alimentation Couche-Tard, a global leader in the convenience store and fuel retail industry, is contemplating a transaction that could significantly reshape its business structure and market presence. The company's strategic moves are closely watched by investors, as they could have a substantial impact on its financial health and competitive position.
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. Additionally, third-quarter fiscal year 2024 adjusted EPS decreased by 12% to $0.65, falling short of analysts' projected EPS of $0.84.
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