It’s been about six months since Alimentation Couche-Tard (CA:ATD) CEO Brian Hannasch told analysts that the convenience store operator had the financial strength to make a US$10 billion to US$15 billion acquisition.

“I’m hoping the uncertainty that’s out there today does create an environment where we can be acquisitive,” Bloomberg News reported Hannasch’s comments at the time. “The balance sheet’s in good shape, it’s ready.”

On Thursday, the CEO made good on his promise to get back in the M&A game in a big way. Couche-Tard’s last major purchase was its US$4.4 billion acquisition of Texas-based CST Brands in 2017.

ATD stock closed 2.7% higher on the day, taking year-to-date gains to 5.2%. By comparison, the iShares Canadian Growth Index ETF (CA:XCG) is up 3.3% in the same period. Alimentation Couche-Tard shares are the eighth-biggest holding in that exchange-traded fund, at 4.6% weight of the 43 stocks held.

Bigger Footprint

While it wasn’t a $10 billion deal, it will go a long way to dominating the European convenience store and gas station market.

Couche-Tard is buying 100% of TotalEnergies SE’s (US:TTE) retail assets in Germany and the Netherlands. In addition, it gets a 60% controlling interest in its Belgium and Luxembourg businesses.

The acquisition includes 1,195 locations in Germany, 566 in Belgium, 387 in the Netherlands and 45 in Luxembourg. According to its press release, 68% of the locations are company-owned, while 32% are dealer-owned.

For these assets, Couche-Tard is paying EU3.1 billion ($4.5 billion). It plans to finance the deal with cash on its balance sheet, existing credit facilities and new term loans. It is paying 6.8x its 2022 EBITDA of US$455 million ($662.4 million).

Adding the 2,193 locations is growing its European footprint by 81%. It currently has 2,703 locations in eight countries: Norway, Sweden, Denmark, Lithuania, Estonia, Latvia, Ireland, and Poland.

One of the attractions of this deal is that nearly 44% of the 2,193 locations have car washes. The company acquired True Blue Car Wash LLC in February for US$396 million ($543.9 million). True Blue operates 65 express tunnel car wash sites under the Clean Freak and Rainstorm brands in the U.S. Midwest and Southwest.

In addition, CoucheTard believes that it can significantly grow the food service and in-store sales at these acquired locations.

“We believe our European model that we have, both on the food and merchandise side, that we’ve evolved over the last decade, will resonate in these markets,” Hannasch said during its Q3 2023 conference call.

Better Operator

Total Energies is selling these locations for two reasons.

First, Couche-Tard can do a better job generating revenue and profit growth from the locations. Secondly, the move will allow Total to reduce its petroleum product sales by 30% by 2030.

“This transaction is aligned with TotalEnergies’ strategy to become a multi-energy company and its ambition to get to Net Zero by 2050, together with society. In particular, TotalEnergies has set a target of reducing its petroleum product sales by 30% by 2030 so that its fuel sales and refining throughput do not exceed its oil production,” stated Total Energies’ press release.

The deal must still gain regulatory approval in Europe. If so, it should close before the end of 2023.

To be sure, Europe also continues to be a challenge, as Couche-Tard acknowledged in its earnings announcement earlier this week, quoting Hannasch with “…our markets across the globe, especially those in Europe, continue to face persistently high inflationary conditions.”

Before the announcement of this multi-billion-dollar acquisition, Couche-Tard’s most recent purchase was 45 Big Red Stores in Arkansas on Feb. 27. That move quadrupled the number of stores in Arkansas. They are all company-owned, as is the real estate in all but one location.

No terms were announced for that acquisition.

This article originally appeared on Fintel

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