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* Q1 EPS 69 cents vs 48 cents
* Analysts forecast EPS 56 cents
* Canada same-store merch. sales up 6.6pct, U.S. up 4.4pct
* Acquires 10 U.S. stores, deal closes September
* Shares close up 8.2 pct at C$22.69 (Adds comments from conference call, analyst, updates stock price. In U.S. dollars unless noted)
By Solarina Ho
TORONTO, Aug 24 (Reuters) - Alimentation Couche-Tard Inc (ATDb.TO), Canada's largest convenience store chain, posted a 42.2 percent rise in quarterly profit on Tuesday and said it is acquiring 10 stores from U.S.-based Compac Food Stores Inc.
Couche-Tard stock, which was halted pending the news, rose nearly 12 percent once trading resumed.
Couche-Tard, which has been pursuing U.S.-based Casey's General Stores Inc (CASY.O) in a $1.9 billion hostile takeover battle, said higher merchandise and service sales, strong gasoline margins and good cost control all contributed to the rise in profit.
"What I think was really impressive this quarter was the strong merchandise performance in both Canada and the U.S.," said Canaccord Genuity analyst Derek Dley.
Merchandise sales at stores open at least one year, or same-store sales, were up 6.6 percent in Canada and were 4.4 percent higher in the United States.
For its first quarter, ended July 18, the company said net income rose to $129.5 million, or 69 cents a share, from $91.1 million, or 48 cents a share, a year earlier.
Analysts had, on average, expected earnings of 56 cents a share, according to on Thomson Reuters I/B/E/S.
Revenue at Montreal-based Couche-Tard climbed 16.3 percent to $4.3 billion from $3.7 billion.
Its merchandise and service gross margin was 35.1 percent in Canada and 32.9 percent in the United States.
"Our first-quarter financial results marked a fantastic way to begin the new fiscal year and really gave us something to build on," Chief Executive Alain Bouchard said during a conference call with analysts.
Couche-Tard, which often announces small acquisitions during its quarterly results, said the deal for the company-operated Compac stores, located in Alabama and Florida, was made on June 24 and was expected to close in September. The price was not disclosed.
Six other stores were acquired during the quarter in separate transactions.
"It's part of their strategy. It's not going to really move the needle for Couche-Tard," said Dley, noting: "Adding stores a little bit at a time -- eventually it adds up."
"Tone of commentary was muted relative to prior quarter," RBC Capital Markets analyst Irene Nattel wrote in a research note, and raised her price target for Couche-Tard to C$25 from C$24.
Couche-Tard operates more than 5,800 stores in Canada and the United States under banners including Mac's and Circle K. It is North America's largest independent convenience store operator in terms of company-operated stores.
CEO Bouchard addressed the company's bid for Casey's by stating that it would continue to evaluate options and make decisions based on the actions of Casey's board and its shareholders.
Couche-Tard has fielded candidates for all eight positions on Casey's board, a move the U.S. company has urged its shareholders to reject at its annual meeting on Sept. 23. [ID:nN23191082]
Casey's, which has 1,500-plus convenience store in the U.S. Midwest has been fighting off what it calls Couche-Tard's "lowball offer" since early April.
"Whether or not we are able to make a deal with Casey's, we expect to be making additions to the network in the coming months," Bouchard said during the call.
Couche-Tard shares finished C$1.71 higher, or 8.2 percent, at C$22.69 on the Toronto Stock Exchange after climbing as high as C$23.44, a 52-week high and a gain of 11.7 percent.
$1=$1.06 Canadian Reporting by Solarina Ho; editing by Rob Wilson