Alimentation Couche-Tard Inc., parent of the Circle K convenience-store brand, has held “exploratory discussions” with buyers for any U.S. stores that would need to be divested to secure regulatory approval for a potential acquisition of rival global retailer Seven & i Holdings Co. Ltd., parent of the 7-Eleven brand, according to a Bloomberg report.
Couche-Tard executives, including founder and chairman Alain Bouchard, will visit Tokyo next week to try and advance discussions with Seven & i, and are also planning to hold a news conference on March 13 to publicly present their case for buying the company, the news agency said.
“We have identified a potential divestiture portfolio of U.S. stores,” Couche-Tard said in a statement to CSP Daily News. “In collaboration with Seven & i, and to provide further assurance, Couche-Tard is having exploratory discussions with third parties to identify potential acquirers.”
Couche-Tard said they believe there is a clear path to obtaining regulatory approvals for a transaction with Seven & i, and that it has made a “robust proposal” to Seven & i about its commitment to doing so.
Couche-Tard has a successful track record of 75 acquisitions since 2004, it said, which have included working with U.S. and other regulators.
“We look forward to demonstrating to Seven & i the viability of securing U.S. regulatory approval and to engaging in constructive dialogue to reach a mutually agreeable transaction that benefits both companies’ customers, employees, franchisees and shareholders,” Couche-Tard said in the statement.
In August, Couche-Tard submitted a proposal, $14.86 per share or approximately $39 billion, to acquire Seven & i, which has rejected the proposal twice, saying it “undervalues” the company. Couche-Tard in October raised its offer to $18.19 per share or approximately $47.2 billion.
The company was also considering a management buyout with funding from banks, trading company Itochu Corp. and the founding Ito family in a deal that would have been worth more than $58 billion. In late February, however, Itochu withdrew from the buyout, essentially ending that effort.
Meanwhile, Seven & i on Thursday announced a series of “transformational” leadership, capital and business initiatives to sharpen its focus on its convenience-store business and unlock value to shareholders.
The initiatives include Stephen Dacus, chairman and lead independent outside director, succeeding Ryuichi Isaka as president and representative director and CEO; a North American initial public offering (IPO) for 7-Eleven; and a large, potential divestiture package that could be sold to a “viable, credible and independent buyer.”
Couche-Tard has made it clear that it wants to learn from the Japanese brand to improve its North America operation, and has ruled out going hostile in takeover talks.
Bouchard, as well as CEO Alex Miller and CFO Filipe Da Silva, will attend the news conference in Tokyo, scheduled for 11 a.m. on Thursday, the company said.
Seven & i “has been committed to exploring all value creation opportunities, including active and constructive engagement with [Couche-Tard] and will continue to do so,” Dacus said. But a consistent issue that Seven & i has raised with Couche-Tard has been how to address the serious U.S. antitrust challenges that any transaction would face.
“Recently … the parties have been working to put together a potential divestiture package (which would be unprecedented in scope and size) that could be divested to a viable, credible and independent buyer in a manner that could be stood up to operate effectively on a go-forward basis and assure competition between ACT and the buyer of the divested stores, even after a transaction,” Seven & i said.
It added, “The Special Committee will continue to constructively engage with [Couche-Tard] to determine whether a credible and actionable remedy and divestiture package can be achieved.”
In its statement today, Couche-Tard said, “We believe there is a clear path to obtaining regulatory approvals of a transaction.”
7-Eleven is the largest convenience store operator in the United States, with 12,600 locations, while Couche-Tard is second with 7,100 Circle K stores. Any acquisition by Couche-Tard would likely face an antitrust review by U.S. regulators and force the retailer to divest as many as 2,500 stores, according to a Bloomberg Industries analysis.
Couche-Tard said in the statement that it “has a successful track record of 75 acquisitions since 2004, which have included working with U.S. and other regulators.”
Bloomberg News reported that Couche-Tard has yet to sign a non-disclosure agreement that would give the Canadian company access to detailed financial information that its board believes is necessary to make a formal binding offer, a common step in such negotiations.
- 7-Eleven is No. 1 on CSP’s 2024 Top 202 ranking of U.S. c-store chains by store count. Alimentation Couche-Tard is No. 2.
Seven & i, Tokyo, operates convenience stores, superstores, supermarkets, specialty stores, foodservices, financial services and IT services. Irving, Texas-based 7-Eleven Inc. operates, franchises or licenses more than 83,000 convenience stores in 19 countries and regions, including more than 13,000 7-Eleven convenience stores in the United States and Canada.
Alimentation Couche-Tard, Laval, Quebec, operates in 31 countries and territories, with more than 16,700 stores. Its network includes more than 7,100 stores in the United States, primarily under the Circle K banner.
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