Alimentation Couche-Tard

is clamouring to grow. Its best bet is to penetrate the global convenience store industry. This week’s Faceoff.

With good reason, investors hammered the stock of Alimentation Couche-Tard Inc. (ATD.T) on Jan. 13, after the news first broke that the Laval, Que.-based operator of convenience stores (C-stores) had made an initial $25.5-billion offer to acquire the much larger Carrefour SA of France (CA.PA). Carrefour is a troubled company in the middle of a turnaround. And CoucheTard (“night owl” in English) has no expertise in Carrefour’s principal business of grocery retailing. It was a relief when the French government effectively killed the deal last week, citing “food sovereignty.”

But Couche-Tard investors, who’ve been rewarded with a 53 per cent increase in the value of their shares since 2016, still have reason for concern. In its bid to double profits by 2024, Couche-Tard appears willing to scrap its successful strategy of focusing on C-store dominance, and instead expand into grocery superstores, fast-food restaurants and even dollar stores, or so its CEO told investors this week. With a market cap of $42 billion, Couche-Tard’s shareholder value is more than twice that of Carrefour. Yet Couche-Tard is now flirting with remaking itself into another Carrefour, a sprawling, diverse enterprise that struggles to earn a decent return on invested capital. The two firms now say they’re continuing to discuss “partnerships.” Couche-Tard investors have to hope that leads to nothing more than adding Carrefour’s 7,700 C-stores to Couche-Tard’s 12,000 convenience stores, through a joint venture or outright purchase.