What do you think about ATD buying Seven & i? What would be the impact on the stock price?

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Asked on August 19, 2024 7:14 pm
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First off, I'm not thinking about it too much at this point in time because I highly doubt this deal will go through. An international takeover is certainly something that is not likely to go well with Japanese regulators.

On the chance the deal does go through though, I'm not particularly bullish on it. This is a gigantic acquisition, more than half the size of Couche-Tard itself, and has a lot of moving parts and difficulties. Smaller tuck-in acquisitions are often beneficial, but large-scale ones like this tend to have their bumps in the road.

However, I'll cross that bridge in terms of analysis when we get there. For now, I don't think it's going to be accepted, and if it is, regulatory hurdles will come into play.

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Posted by Dan Kent
Answered on August 20, 2024 11:33 am
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Think about it. Ir’s a huge, international acquisition with more than Japan involved. Personally, I think ATD has bitten off more than it can comfortably chew. There are going to be anti-monopoly reviews in multiple countries where they both operate. This will take a long time, be very distracting to ATD executive and ATD will at best not be allowed to buy all of the chain, divesting stores operating near to one another. Then, if it does go through, they have to successfully meld together two companies that operate similarly, but differently, no small feat. Easy to for a small tuck-in, challenging for this one. ATD will need to raise much cash, so share buy-backs will now stop, so no further help to the share price. In the meantime, at the last quarterly conference, ATD reported weakening customer spending. My guess is that ATD share price will now go nowhere for the next 18 months plus as this gets sorted out, so why hang around? Now, Dan is also right, the offer may simply get rejected much sooner.
(Krispee at August 28, 2024 1:22 am)