NEW YORK (TheStreet) -- Shares of The Pantry Inc. (PTRY) are rising by 2.56% to $36.43 on heavy volume in mid-morning trading on Thursday, after the convenience store chain, found in the southeastern U.S., agreed to be acquired by Quebec-based convenience store operator Couche-Tard (ANCUF) .

The Couche-Tard/Pantry deal is an all cash transaction valued at $36.75 per share, with a total enterprise value of approximately $1.7 billion, including assumed debt, the companies said.

The deal is expected to close during the first half of 2015.

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"The Pantry is an excellent company and is well positioned in the Southeastern and Gulf Coast regions of the U.S., two of the fastest growing areas of the U.S. With this transaction we will add more than 1,500 stores to our network which will position us as the definitive leader in this region and will reinforce our position as one of the largest convenience store operators in North America," Couche-Tard CEO Brain Hannasch said.

Separately, TheStreet Ratings team rates PANTRY INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate PANTRY INC (PTRY) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, solid stock price performance and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • PTRY's revenue growth has slightly outpaced the industry average of 1.2%. Since the same quarter one year prior, revenues slightly increased by 7.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • PANTRY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PANTRY INC turned its bottom line around by earning $0.56 versus -$0.14 in the prior year. This year, the market expects an improvement in earnings ($1.14 versus $0.56).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food & Staples Retailing industry. The net income increased by 1407.7% when compared to the same quarter one year prior, rising from $0.97 million to $14.66 million.
  • Powered by its strong earnings growth of 1475.00% and other important driving factors, this stock has surged by 85.61% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • Net operating cash flow has increased to $59.39 million or 26.35% when compared to the same quarter last year. Despite an increase in cash flow, PANTRY INC's average is still marginally south of the industry average growth rate of 31.91%.
  • You can view the full analysis from the report here: PTRY Ratings Report

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