Parkland Corp., which operates gas stations and On the Run convenience stores, is buying frozen food retailer M&M Food Market as it aims to broaden its food offerings and customer reach. 

The deal was announced after the close of trading on Tuesday, and will see Parkland buy M&M for $322 million, which will be funded out of its existing credit facility.

“This acquisition provides a platform to grow our food offer, expand our proprietary brands, and advance our digital and loyalty strategy," said Ian White, senior vice president of strategic marketing and innovation at Parkland, in a release. 

The deal includes 300 standalone M&M stores and more than 2,000 M&M Express locations. 

Parkland said it plans to leverage M&M’s frozen food expertise to develop new offerings for its convenience stores. It also said it sees an opportunity to merge the two companies’ rewards programs. 

As Parkland maps out its growth strategy for its fuel retail network, Scotiabank analysts want to see the company take its foot off the gas.

In a note to clients on Tuesday, released before the M&M deal was announced, Scotiabank analysts downgraded Parkland’s rating to “sector perform” from “sector outperform” and lowered their price target by $9 to $41 per share. 

Analyst Ben Issacson concluded “investor uncertainty is increasing with respect to the sustainability of the business model,” as the world transitions to electric vehicles and the shift to remote work eats into fuel demand. 

Issacson acknowledged Parkland’s “near-flawless execution,” but said “rightly or wrongly, investors want Parkland to take their foot slightly off the [adjusted profit] growth gas, and return significantly more capital to shareholders” – likely in the form of a dividend hike.