Even as a rival “white-knight” bidder emerges, Seven & i Holdings Co. Ltd. and Alimentation Couche-Tard Inc. are finally beginning to talk, and negotiations have begun after months of “stonewalling” over Couche-Tard’s more than $47 billion bid to acquire the Tokyo-based parent of 7-Eleven Inc., the Financial Times reported on Wednesday.
“Preliminary and limited” talks between the two companies’ advisers have begun, three people briefed on the matter told the newspaper. Any such talks come as Seven & i said it is considering a $58 billion management buyout to take itself private with funding from banks, Itochu Corp. and the founding Ito family, people with knowledge of the matter told Bloomberg on Tuesday.
Couche-Tard in August submitted a “friendly,” nonbinding proposal to Seven & i to acquire all outstanding shares of the 7-Eleven Inc. parent. Seven & i confirmed at the time that it had received the confidential, nonbinding and preliminary acquisition proposal, and its board formed a special committee of independent outside directors to review it. Seven & i has rejected the initial proposal twice, saying it “undervalues” the company.
Couche-Tard has since raised its offer, from $14.86 per share or approximately $39 billion, to $18.19 per share or approximately $47.2 billion. The new bid is a 22% premium over the initial bid.
Couche-Tard Founder and Chairman Alain Bouchard, new CEO Alex Miller, former CEO Brian Hannasch and CFO Filipe Da Silva visited Japan in October. Seven & i management did not meet with the Couche-Tard executives during their trip to Japan, according to a Bloomberg report.
“We have invited them, we have tried to organize a meeting, but it didn’t work, but it will eventually,” Bouchard told the news agency. “We also want to gain a better understanding of the Japanese culture, but mainly [about] the Japanese concerns [around the deal]. We want to obviously introduce ourselves because people don’t know us.”
A spokesperson for Seven & i told Bloomberg that they have kept any discussions with Couche-Tard private and will continue to do so. “We will continue to respond sincerely to discussions that fully recognize the intrinsic standalone value of our business and also address our regulatory concerns,” the spokesperson said.
All in the Family
The proposal from Junro Ito, a son of the founder and a vice-president of the company, and Ito Kogyo, a company representing other members of the family, marks the first appearance of a potential white knight bidder for Seven & i, which has strongly opposed Couche-Tard’s advances, the Financial Times said.
Although no price has been disclosed, the Ito proposal, according to people close to the situation, would require unprecedented levels of borrowing from Japan’s largest banks, along with equity investment from a domestic company, the report said.
Ito Kogyo currently has an 8.2% in Seven & i.
Itochu, one of Japan’s biggest trading houses and already the owner of the Family Mart c-store chain, has been involved in talks over the new buyout proposal, people close to the situation told the paper.
Experts said any involvement of Itochu could prove difficult. Family Mart is the second-largest c-store chain in Japan, and if it becomes the owner of Seven & i, it would control at least 65% of Japan’s convenience-store market by sales, according to the report.
Mitsui & Co, a trading house which does not own any convenience-store chain, has also been linked to a possible offer, said the Financial Times. A spokesman for that company declined to comment to the paper on whether they were involved in talks with the Ito family.
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.
Tokyo-based Seven & i is a global operator of convenience stores, superstores, supermarkets, specialty stores, foodservices, financial services and IT services. 7–Eleven International LLC franchises or licenses more than 44,000 stores in 19 countries and regions, The brand also operates corporate or franchise stores in the United States, Canada, Mexico and Japan. Globally, the 7-Eleven trademark is represented in approximately 83,000 stores.
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.
Laval, Quebec-based Couche-Tard operates in 31 countries and territories, with more than 16,700 stores. Its network includes more than 7,100 stores in the United States under the Circle K and Holiday Stationstores banners, and approximately 2,100 in Canada under the Circle K and Couche-Tard banners.
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