Alimentation Couche-Tard Inc. remains steadfast in its pursuit of acquiring Seven & i Holdings, the Japanese operator of the 7-Eleven convenience store chain, despite recent resistance from the company’s leadership.
Alex Miller, CEO of the Quebec-based convenience store giant, reaffirmed the company’s commitment to the deal on Wednesday, stating that Couche-Tard sees a “unique strategic fit” in merging with the Tokyo-headquartered firm. His comments came after Seven & i publicly disclosed a letter sent to Couche-Tard in September, outlining reasons for rejecting the proposal.
In a letter signed by then-chair Stephen Dacus, who has since taken over as CEO, Seven & i firmly stated that the offer was “not in the best interest of Seven & i shareholders and other stakeholders.” The company cited concerns over corporate value enhancement and potential antitrust challenges in the United States.
However, Seven & i also left the door open for negotiations, with Dacus indicating that the company was open to discussions if Couche-Tard made an offer that “fully recognizes our stand-alone intrinsic value.”
Couche-Tard Remains Committed to Pursuing the Deal
Speaking on a conference call regarding Couche-Tard’s third-quarter financial results, Miller stated that the company remains “friendly and persistent” in advancing the acquisition.
“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,” Miller said. “We look forward to fulsome engagement with Seven & i, so that we can reach definitive terms and move forward.”
Reports suggest that Couche-Tard’s latest non-binding offer in October was valued at approximately US$47 billion—roughly 22 per cent higher than the previous bid submitted in August.
Addressing Antitrust Concerns
A key issue surrounding the deal is antitrust scrutiny in the U.S., given the extensive footprint of both companies in the North American convenience retail sector. A special committee formed by Seven & i recently confirmed that both parties are exploring potential divestitures to satisfy regulatory authorities.
Miller noted that Couche-Tard and Seven & i are identifying what a “divestment would look like in the United States,” with potential buyers having already signed non-disclosure agreements. These sales could allow the companies to secure regulatory approval while preserving the core benefits of the merger.
Engagement Continues as Annual Meeting Approaches
Couche-Tard’s leadership has maintained active dialogue with Seven & i executives, including a recent visit to Japan to continue negotiations. Miller stressed that combining the two businesses would create significant synergies and bolster the global presence of the 7-Eleven brand.
“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,” Miller emphasized.
Couche-Tard will likely continue its engagement efforts in the weeks leading up to Seven & i’s annual general meeting on May 27. The meeting could be a turning point in negotiations, potentially influencing Couche-Tard’s approach to the acquisition.
Financial Performance Supports Couche-Tard’s Expansion Plans
As Couche-Tard works through its acquisition strategy, the company reported strong financial performance in its latest quarterly results. For the third quarter ending February 2, the retailer posted net earnings of US$645 million, up from US$624.4 million a year earlier.
Total revenue reached US$20.9 billion, reflecting a 6.5 per cent increase from the previous year, driven by acquisitions and higher wholesale fuel revenues. Earnings per diluted share rose to 68 cents US, in line with analysts’ expectations.
Consumer Spending and Trade Uncertainty Remain Key Factors
Miller acknowledged ongoing economic headwinds, noting that consumer spending remains cautious. He expressed confidence in the resilience of Couche-Tard’s business model but highlighted concerns about inflation and the potential impact of trade tensions between Canada and the U.S.
“The larger impact is what it means for inflation and what it means for consumers that are already stretched and really struggling with disposable income,” Miller said. “That’s kind of the big unknown that we’ll be watching very closely.”
Despite these macroeconomic concerns, Couche-Tard remains focused on its expansion plans, with the potential acquisition of Seven & i representing a transformative opportunity for the company.
Outlook: Will Couche-Tard Secure the Deal?
The coming weeks will be crucial in determining the future of Couche-Tard’s bid for Seven & i. While the Japanese firm has resisted the Canadian company’s advances so far, ongoing discussions and potential regulatory accommodations could pave the way for a successful transaction.
Should the deal materialize, it would mark a significant milestone in Couche-Tard’s global expansion strategy, further strengthening its position as a leader in the convenience retail industry. However, with continued antitrust scrutiny and resistance from Seven & i leadership, Couche-Tard faces an uphill battle to close the deal on its own terms.
