Couche-Tard eying further expansion with new bid for Cumberland Farms
Alimentation Couche-Tard Inc. is making another play to expand its retail footprint across the U.S. and Europe. According to a report by the London-based Times, the Quebec convenience store giant has submitted a fresh offer to acquire Cumberland Farms Ltd.
The reported proposal values Cumberland Farms at between CA$10.51 and CA$11 billion dollars. Industry sources familiar with the matter noted that Couche-Tard has brought on Royal Bank of Canada to advise on the potential transaction.
Neither company is new to the negotiating table. Couche-Tard and Cumberland have held off-and-on discussions for years. Back in 2022, the two companies exchanged deal proposals that valued Cumberland, previously known as EG Group, at roughly US$16 billion including debt.
Cumberland Farms deal fits Couche-Tard strategy
Cumberland Farms, owned by private equity firm TDR Capital and billionaire brothers Mohsin and Zuber Issa, operates more than 3,200 locations across the U.S. and Europe. Earlier this year, the retail operator filed for an initial public offering in New York aiming for CA$12 billion to pay down debt.
However, recent buyout interest has delayed those public listing plans. Beyond Couche-Tard, firms such as Stonepeak Partners LLP have also shown interest in acquiring the company.
Market analysts view a potential deal as a strategic fit for the Laval-based retailer. RBC Capital Markets analyst Irene Nattel noted in a research report that an acquisition at the reported price range aligns directly with Couche-Tard's goal of disciplined, accretive growth in core American and European markets.
Nattel pointed out that if the final price falls below Cumberland's initial public offering target, the deal valuation would represent roughly 10 times adjusted earnings before interest, taxes, depreciation and amortization. That valuation mirrors what Couche-Tard paid when it purchased CST Brands back in 2017.
READ: Couche-Tard buying fuel retail sites from Irving Oil in Quebec and Ontario
How the acquisition could boost retail operations
For convenience store and fuel operators, a deal of this scale signals continued consolidation across major international markets. National Bank of Canada analyst Vishal Shreedhar highlighted the potential operational advantages, noting that Cumberland brings a stronger mix of non-fuel retail sales.
In the convenience sector, non-fuel products generally yield higher and less volatile profit margins compared to retail fuel sales. Shreedhar noted that this shift toward merchandise sales would be favourable for Couche-Tard while creating significant synergy opportunities, particularly across its U.S. network.
Couche-Tard currently operates more than 17,200 stores worldwide and continues to pursue aggressive international expansion. In July, the company struck a US $8.6 billion deal to acquire Poland-based Żabka Group SA. That deal received backing from Żabka executives and private equity owners including CVC Capital Partners and Partners Group, who together hold about 57% of Żabka's shares.
As Couche-Tard works through its latest international moves, convenience store operators will be watching closely to see how this potential U.S. acquisition reshapes the competitive retail landscape.
