Mergers & Acquisitions

Will Couche-Tard Increase Its Offer for Seven & i?

Convenience-store companies both contemplating their next moves, reports say
seven & i 7-eleven convenience stores
Photograph: Shutterstock

Alimentation Couche-Tard Inc. is discussing improving its offer to acquire Seven & i Holdings Co. Ltd. with the goal of convincing the Tokyo-based convenience-store operator to engage in talks, people with knowledge of the matter told Bloomberg.

Couche-Tard, parent of the Circle K c-store brand, on Aug. 19 submitted a “friendly,” nonbinding proposal to Seven & i, parent of the 7-Eleven and Speedway c-store brands, to acquire all outstanding shares of the company. Seven & i confirmed that it received the confidential, nonbinding and preliminary acquisition proposal, and the Seven & i board formed a special committee of independent outside directors led by Stephen Hayes Dacus, to review the proposal.

Seven & i has rejected the proposal twice, saying the offer of $14.86 per share or more than $38 billion “undervalues” the company.

Laval, Quebec-based Couche-Tard has been considering how much it could increase the offer, the people said, asking not to be identified because the information is private. A bid would need to be significantly higher than the initial proposal in order to get Seven & i to enter into negotiations, the people told Bloomberg.

Seven & i also said Couche-Tard would need to provide more assurances that a deal could survive U.S. regulatory scrutiny by the Federal Trade Commission, which reportedly is on the verge of examining the transaction. As of this posting, the FTC has yet to make a public pronouncement on the matter.

Couche-Tard is debating its next steps, and there is no certainty it will decide to submit another proposal to Seven & i, the people said.

  • 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 investors are also weighing in on the potential deal and, as Brian Madden, chief investment officer of Toronto-based First Avenue Investment Counsel Inc., put it on Bloomberg’s The Street, “rattling the cage.”

Seth Fischer, chief investment officer at Seven & i shareholder Oasis Management, Austin, Texas, told Bloomberg Television that he is “disappointed” that the Japanese retailer rejected Couche-Tard’s acquisition proposal.

“Couche-Tard has put forward a very serious proposal to the company and I am a little bit disappointed with the company’s reaction,” Fischer said. “Now the ball is back in Seven & i’s court to respond.” 

Couche-Tard has said it is willing to work with Seven & i on divesting an appropriate number of stores, Fischer said. There would be plenty of buyers, he said.

Previously, another Seven & i investor, Artisan Partners International Value Strategy, Milwaukee, in a letter asked the company to promptly review Couche-Tard’s proposal. N. David Samra, portfolio manager, and Benjamin L. Herrick, associate portfolio manager, said it was “imperative that the board of directors negotiate with [Couche-Tard] immediately to achieve the best possible outcome for shareholders.”

Meanwhile, Seven & i has brought on Nomura, Japan’s largest investment bank, to advise its board in preparation for a potential takeover battle with Couche-Tard, according to a report by the Financial Times. Seven & i appointed Nomura as an adviser to its independent special committee set up to examine the takeover offer, the report said.

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