Alimentation Couche-Tard Inc. agreed to buy Polish retailer Żabka Group SA for about 32.6 billion zloty (US$8.7 billion), expanding the Circle K owner’s European footprint with its biggest-ever acquisition. The deal marks a renewed focus on the region for Couche-Tard, whose effort to buy grocery chain Carrefour SA was blocked by French regulators in 2021. More recently, it sought to acquire top rival Seven & i Holdings Co., the Japanese owner of the 7-Eleven convenience chain , which itself has courted Żabka without success. Launched in 1998 and modeled on 7-Eleven, Żabka, which means “little frog,” is a ubiquitous presence in Poland, with around 13,000 mostly franchised brick-and-mortar shops. At least 17 million people live no more than 500 meters from the closest store, where they can get coffee, pizza, hot-dogs and French fries in addition to their groceries. Couche-Tard, also known as ACT, already operates about 400 Circle K convenience stores and fuel stations across Poland, one of the fastest growing countries in the European Union with a population of about 37 million people. “In the global two-horse convenience-store race — 7-Eleven versus ACT — Europe now belongs to ACT,” analysts at Bernstein wrote in a note. Couche-Tard will launch a voluntary tender offer for Żabka next month at 32 zloty per share, the Québec-based retailer said Friday. The value of the deal would make it the second-biggest retail M&A transaction this year after GameStop Corp. ’s US$56 billion offer for online auctioneer eBay Inc., according to data compiled by Bloomberg. Żabka executives and private equity owners, including CVC Capital Partners and Partners Group, who together hold around 57 per cent of its shares, have “unanimously backed” the offer and the tender is expected to be completed by December. “ACT’s appetite for large-scale M&A has been confirmed — and a bigger ACT, once it has digested Żabka, is also a bigger threat” to Seven & i, according to the Bernstein analysts. Żabka shares advanced as much as 12 per cent in Warsaw before retreating to just below the offer price of 32 zloty. Since it was founded in 1998 by local entrepreneur Mariusz Switalski, Żabka transformed from an operation that mostly sold alcohol and tobacco into a convenience chain which uses advanced artificial-intelligence models to help find the best locations and adjust products to local preferences. Several factors have coalesced to drive its success, including an upwardly mobile population that’s earning more, laws requiring supermarkets to shutter on Sundays and an AI-driven app to lure customers. The constant drive to increase profits via launching new concepts was partly driven by the fact that Żabka has been a private equity favorite. Before CVC became its biggest shareholder, the company was owned by MidEuropa and previously by Penta Investments. Regulatory decisions have also contributed to Żabka’s popularity. In 2018, Poland’s conservative government launched its Sunday shopping ban, but Żabka’s status as a pickup point for e-commerce deliveries allowed it to keep its doors open. In many places, it became the only point where Poles could also get groceries on a Sunday. It has been striving to develop technologies to boost sales, helping lift them to around 30 billion zloty from 1 billion in 2004. Couche-Tard’s unsuccessful attempt to buy Seven & i. would have dramatically expanded its global presence. It spent nearly a year trying to acquire the company after making an unsolicited takeover proposal in 2024. Seven & i. this month abandoned discussions over a potential investment in Żabka, saying it was unable to reach a deal in the best interests of its shareholders. Couche-Tard chief executive Alex Miller said Friday that Żabka is “world class” in terms of food retail, supply chain, AI use and the strength of its brand. He pledged to preserve its character and management. “They’ve built the kind of tech-powered convenience experience that’s driving the industry forward,” Miller said on a call with reporters. “Put those together and you have a platform positioned to accelerate growth and innovation across Europe and beyond.” Shares in Żabka, which reported revenue of US$7.4 billion in the 12 months through March, had risen 28 per cent this year before the Couche-Tard offer. Proforma combined revenue of Żabka and Couche-Tard over the past 12 months amounts to US$83.9 billion, with adjusted earnings before interest, taxes, depreciation and amortization of US$7.8 billion, according to Friday’s statement. If the Canadian company buys at least 95 per cent of Żabka’s shares, it will aim to delist it from the Warsaw Stock Exchange, where it debuted in 2024. Couche-Tard’s proposal doesn’t fully reflect Żabka’s long-term potential, according to mBank analyst Janusz Pieta, who values the company at 33 zloty. “In a change-of-control transaction we would typically expect a premium to our fair value estimate, rather than a discount,” Pieta said. “Earlier reports of interest from Seven & i Holdings indicate that Żabka is a strategic asset that has attracted attention from multiple industry participants.” JPMorgan Chase & Co. is advising Couche-Tard and Goldman Sachs Group Inc. working with Żabka on the transaction. With assistance from Lisa Du, Ruth David and Zosia Wanat Bloomberg.com
Alimentation Couche-Tard expands in Europe with US$8.7 billion Polish deal
