Alimentation Couche-Tard Inc. ATD-T +1.37%increase is making an US$8.7-billion all-cash takeover play for Polish convenience retailer Zabka Group SA, widening its footprint in Europe with a major push in one of the continent’s fastest-growing economies.
It’s the Canadian company’s biggest acquisition to date, further cementing its position in a key part of the world against global rival 7-Eleven. It’s also one of its most unique acquisitions as it takes control of a dominant, technology-powered retailer already near the top of its game.
“This transaction, candidly, is like none I’ve ever done in the 14 years that I’ve been here,” Couche-Tard chief executive Alex Miller told analysts on a call, referring to his nearly two years as CEO and various senior leadership positions before that.
“Usually it’s us looking what we can bring” to get the most from the company we’re buying, he said. “In this example, we see a lot of things that we think can be brought to us.”
Laval, Que.-based Couche-Tard, which owns the Circle K convenience store chain, said Friday it will launch a voluntary tender offer for Zabka at a price of 32 Polish zloty or about US$8.48 a share. That’s a premium of about 9.4 per cent to its previous closing price.
Owners of about 57 per cent of Zabka stock are backing the deal and have signed agreements to tender their shares, Couche-Tard said. That includes two major shareholders: private equity firms CVC Capital Partners and Partners Group.
No matter how many shareholders tender their shares, Couche-Tard will achieve control of Zabka with an ownership majority. If it succeeds in buying shares representing at least 95 per cent of total voting rights, it plans to squeeze out the remaining stock and move to delist the company from the Warsaw Stock Exchange.
Launched in 1998 and modelled on 7-Eleven’s corner shops in Japan, Zabka boasts a digital strategy that sees half its revenue flow through its AI-driven mobile shopping application. The company, whose name means “little frog,” runs nearly 13,000 stores across Poland and expanded into Romania in 2024.
Its network is built around compact, modular neighbourhood stores averaging about 700 square feet, and includes a chain of unmanned, autonomous outlets operating 24 hours a day. In addition to regular convenience staples, groceries and ready-to-eat meals, it also offers services like parcel pickup. Half of its customers are younger than 35.
“We are a predictable, growing business,” Zabka’s incoming CEO, Tomasz Blicharski, said, adding its sales have more than doubled over the past five years. The retailer has a commanding presence in Poland, with its biggest competition coming from individual mom and pop shops in various corners of the country, he said.
After a solid trajectory of profit growth over the past two decades, Couche-Tard’s business has come under pressure more recently as consumers cut spending to deal with higher levels of debt as well as inflation. Mr. Miller has proven the company can drive sales from existing stores without takeovers but this deal will put investor focus back on deal-making.
Couche-Tard nabbed a toehold in Europe with the purchase of Norway’s Statoil Fuel & Retail in 2012. It was the company’s first major expansion outside North America, giving it a small presence in Poland in addition to more substantial operations in Scandinavia.
That was followed by the takeover of Ireland’s Topaz Energy Group in 2016 and another deal in Germany and the Benelux countries in 2023, when it bought some 2,200 service stations from French oil company TotalEnergies SE. Along the way, it dropped a US$20-billion bid for European retailer Carrefour in 2021 after it wasn’t able to overcome French government opposition.
Japan’s Seven & i Holdings Co., the parent of 7-Eleven and Couche-Tard’s main rival on the international stage, was also in the hunt for Zabka but said earlier this month it couldn’t strike an agreement that would be in its best interests. The Japanese company wants to build its European presence, which is currently limited to three Nordic countries.
Couche-Tard abandoned its own effort to acquire Seven & i last year in what would have been a blockbuster deal. The Canadian company blasted its Japanese rival for failing to engage in meaningful talks when it announced it was ending its campaign – criticism that has given more weight to the rivalry between the two retailers ever since as they battle for convenience store supremacy.
The Circle K owner likes Zabka for a number of reasons, including the Polish company’s skills at food retailing, extensive distribution network and advanced data and analytics expertise. In short, Mr. Miller said: “Many of the capabilities we believe will define the future of convenience already exist at scale within Zabka.”
Poland’s economic strength doesn’t hurt either. An economy that was once wilting behind the Iron Curtain has transformed over three decades to become one of Europe’s most dynamic, with GDP growth of 3.6 per cent last year.
The transaction is expected to be accretive to the margin on adjusted earnings before interest, taxes, depreciation and amortization right away, and accretive to earnings per share by the second year following deal finalization, Couche-Tard said. According to the company, it can achieve about US$250-million worth of cost-saving opportunities within three years.
Couche-Tard said it intends to fund the transaction through fully committed debt facilities, with J.P. Morgan as lead arranger, and National Bank of Canada Capital Markets and Bank of Nova Scotia acting as joint bookrunners.
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