Alimentation Couche-Tard Inc., parent of the Circle K convenience-store brand, on Jan. 24 submitted a revised, yen-denominated, nonbinding proposal at Seven & i Holdings Co. Ltd.’s request to confirm its “continued interest” in acquiring Seven & i, Couche-Tard revealed in a media update on Monday. It did not disclose the amount of this offer.
Last August, Couche-Tard submitted a bid of $14.86 per share or $39 billion to acquire Seven & i, parent of the 7-Eleven c-store brand, which rejected the proposal twice, saying it “undervalues” the company. Couche-Tard in October raised its offer to $18.19 per share or $47.2 billion. A $58 billion management buyout with funding from banks, trading company Itochu Corp. and the founding Ito family fell apart in late February with the withdrawal of Itochu.
Seven & i on March 6 issued a press release to provide additional information related to its “constructive, ongoing engagement” with Couche-Tard and other potential acquirers. Along with leadership changes, a U.S. 7-Eleven initial public offering (IPO) and noncore asset sales, the letter focuses on the options for potential divestitures to minimize antitrust issues, including Couche-Tard selling all of its stores in the United States.
In response, Couche-Tard on Monday issued a statement regarding its latest proposal to acquire Seven & i.
“Couche-Tard has deep respect for Seven & i and the business it has built in Japan and around the world, including its operating model, franchisee network and brand,” Couche-Tard said. “For many years, we have firmly believed that there is a unique strategic fit between Couche-Tard and Seven & i, and that we can achieve significantly more together than each of our companies can achieve individually, including accelerating the global growth of the iconic 7-Eleven brand and strengthening the Seven & i business in many parts of the world. We also firmly believe that a combination provides an opportunity for shareholders and stakeholders of both companies to realize significant value.”
It added, “In our most recent efforts to engage with Seven & i with respect to a potential transaction, we have spent over six months attempting to enter fulsome, constructive, friendly discussions to reach a mutually agreeable transaction and have conscientiously worked to address the questions on our proposal posed to us by Seven & i. We remain focused on entering into these more fulsome discussions and continue to be disappointed that engagement has been very limited and focused only on the path to U.S. regulatory approval.”
“We believe our proposal presents shareholders with a clear economic value, which stands in marked contrast to Seven & i’s repeatedly revised plan as announced last week,” said Couche-Tard, which said the plan for an IPO, capital return plan and a turnaround in c-store performance “come with material uncertainty with respect to delivering value to shareholders.”
The company said it has a successful track record of working with U.S. regulators and a “clear path” to U.S. regulatory approval.
Couche-Tard said it has shared a detailed proposal with Seven & i outlining the commitments it would be willing to make to achieve regulatory approvals, including a “robust commitment” to a specific base number of stores it would be willing to divest. It also has committed to a “large reverse termination fee, structured to ensure Couche-Tard would be highly motivated to take additional actions as may be necessary in order to complete the transaction.”
“We were also very clear at that time that we were ready to immediately begin collaborative work to align on a portfolio of stores to be divested and to prepare to market that portfolio to potential buyers,” it said.
In February, Seven & i insisted on Couche-Tard soliciting interest from the potential buyers, the company said, including due diligence and discussion of other transaction terms. “In the spirit of being constructive, we agreed to do so despite this being an unusual process request, and the incremental time this would add to our discussions. Over a month later, we have only now received Seven & i’s consent to reach out to potential buyers of the stores to be divested,” Couche-Tard said.
“The divested business would be a leading operator in the U.S., with national scale and exposure to attractive markets. Couche-Tard would be committed to standing up the business with the infrastructure and leadership required to create a great business. We firmly believe that the divested business will be a strong and extremely viable competitor in the U.S. and will attract interest from credible buyers,” it said.
“It is time for full engagement,” Couche-Tard concluded. “We have reiterated several times over the past few months that we intend to be friendly and persistent in pursuing a transaction, which we believe is in the best interest of all stakeholders. We have done that in the face of significant frustration and distraction. We look forward to fulsome engagement with Seven & i so that we can reach definitive terms and move forward with a transaction that is in the best interest of all stakeholders.”
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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