Circle K owner potential buyer if Petro-Canada gas stations go up
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Suncor Power Inc.’s choice to bow to investor strain and examine a sale of its gasoline stations has turned the highlight on one potential purchaser — Quebec’s Alimentation Couche-Tard Inc.
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The acquisitive proprietor of the Circle Ok chain has been looking for a significant acquisition and tried unsuccessfully to take over French grocery chain Carrefour SA final 12 months. Suncor mentioned Monday it should take into account choices for its downstream property, which embody greater than 1,500 Petro-Canada places, making it one of many nation’s largest retail gasoline and comfort retailer chains.
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Petro-Canada can be a large deal for many patrons, with a price ticket that some analysts estimate at greater than C$10 billion ($7.7 billion). For Couche-Tard, it will possible include important antitrust hurdles.
The Laval, Quebec-based agency manages near 2,100 shops throughout Canada and about 1,200 have gasoline stations. There’s plenty of overlap with Petro-Canada, particularly within the japanese a part of the nation.
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“Couche-Tard, I feel, would have a tough time shopping for the entire community. There can be competitors points there, focus points,” Ryan Bushell, president of Newhaven Asset Administration Inc., mentioned on BNN Bloomberg Tv.
Parkland Corp., a smaller Canadian gasoline retailer, has additionally been in acquisition mode, however with a inventory market worth of C$5.2 billion, Petro-Canada can be a “large chunk,” Bushell mentioned. “I’ll have an interest to see if a 3rd participant, or possibly a world participant, emerges.”
Suncor closed up 1.1% in Toronto on Monday after earlier rising as a lot as 5%. Couche-Tard dropped 1.9% whereas Parkland jumped 3%.
Officers from Couche-Tard and Parkland declined to remark.
Martin Landry, an analyst at Stifel GMP, believes giant retailers like EG Group Ltd. or 7-Eleven Inc.’s mum or dad may have some curiosity. Petro-Canada stations “are top quality and well-maintained and positioned,” he mentioned, including that he calculates the valuation at “roughly” C$10 billion to C$14 billion.
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If Couche-Tard wished to purchase the enterprise, it will most likely must divest 50% of the gasoline stations attributable to antitrust points, in response to Landry.
Credit score Suisse analyst Manav Gupta pegged the worth of the division at C$9.6 billion to $11.2 billion, based mostly on an estimate it might probably earn C$800 million earlier than curiosity, taxes, depreciation and amortization on a normalized foundation.
Others questioned whether or not a sale in response to an activist push by Elliott Funding Administration LP will generate a excessive worth.
“Do you really want to fireplace sale this factor when all people is aware of that you simply’ve aired your entire laundry?” mentioned Rafi Tahmazian, accomplice and senior portfolio supervisor with Canoe Monetary in Calgary, which continues to carry “a small place” in Suncor.
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“I’d need a good rationalization from them on why there’s such a hate-on for an asset when it doesn’t really feel like the correct time to be doing that to your self,” Tahmazian mentioned, including that vitality markets are unstable in the intervening time and the corporate can be higher off ready for a transparent course earlier than looking for a purchaser.
“You’ve already had main gasoline stations promote within the final six years or so,” Eight Capital analyst Phil Skolnick mentioned. He thinks Elliott’s estimate that the enterprise could possibly be price 14 occasions Ebitda is just too wealthy, given a restricted pool of patrons and the potential for gasoline costs to fall from present ranges.
