Following the rejection by Seven & i Holdings Co. Ltd.’s board of directors of Alimentation Couche-Tard Inc.’s approximately $38 billion takeover bid, Couche-Tard on Sunday issued a statement expressing the company’s desire to continue its “friendly” pursuit of a “combination” of the two global convenience-store companies.
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 c-store brand, 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, comprised solely of independent outside directors and led by Stephen Hayes Dacus as chairperson, to review the proposal.
Value and Opportunity
Dacus, writing on behalf of the board, rejected the proposal offering $14.86 per share in cash, saying it “grossly undervalues” Seven & i as well as the “opportunities to unlock” its intrinsic value.
“I want to emphasize that the 7&i board is single-mindedly focused on delivering value for 7&i shareholders and other stakeholders,” the letter said. “We are open to sincerely consider any proposal that is in the best interests of 7&i shareholders and other stakeholders; however, we will resist any proposal that deprives our shareholders of the company’s intrinsic value or that fails to specifically address very real regulatory concerns.” It emphasized that Seven & i is “open to engaging in sincere discussions.”
In its Sept. 8 response to Seven & i’s letter, Couche-Tard said, “Given the mutual benefits of a combination, we are disappointed in 7&i’s refusal to engage in friendly discussions. We are highly confident that collaborative discussions would lead to our ability to find increased value for 7&i shareholders. We requested to have our advisors engage in discussions with the advisors to 7&i, which was rejected. We offered to enter into a non-disclosure agreement (NDA) to enable both sides to share information to find more value, and this request was also rejected. We remain ready and willing to enter into an appropriate NDA to advance friendly discussions. In addition to enabling Couche-Tard to find more value, engagement will also enable us to refine our regulatory proposal to sufficiently address deal certainty.”
It added, “We stand by prepared to enter into collaborative and friendly discussions with 7&i to focus on finding greater value for 7&i and its shareholders, providing regulatory certainty and ensuring that the combined entity continues to be the leader and provider of premier offerings in the markets we both serve.”
Returns and Regulatory Concerns
In terms of shareholder returns, “Couche-Tard has generated total shareholder return of over 450% in the last 10 years, more than nine times greater than 7&i over the same period,” the company said in its response, among other assurances.
In terms of regulatory approvals, “Couche-Tard has a successful history and track record of acquisitions and working with U.S. and other regulators, in full compliance with applicable processes and requirements,” the company said. “7&i and Couche-Tard largely operate in complementary markets across the U.S.” It added, “As 7&i and Couche-Tard have both done previously as part of successful acquisitions, we would, alongside 7&i, jointly consider divestitures that may be required to secure regulatory approvals.”
Regarding financing for the deal, Couche-Tard said, “We are highly confident that we have sufficient capacity to finance the transaction in cash and that financing would not be a condition to closing a transaction. Couche-Tard has a very strong balance sheet and strong investment grade credit ratings. We are a sophisticated and disciplined user of the capital markets and have well-established relationships with major financial institutions and investors who are willing to support us in this transaction. … Our acquisition history reflects a high level of discipline and execution excellence on behalf of our stakeholders, and we plan to take the same approach in this situation. In summary, we remain highly focused on consummating a transaction with 7&i that is in the best interests of all constituencies.”
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, including Australia, Cambodia, China (including Hong Kong/Macau, Taiwan and other areas), Denmark, India, Israel, Laos, Malaysia, Norway, Philippines, Singapore, South Korea, Sweden, Thailand and Vietnam. 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. In addition to 7-Eleven c-stores, the company operates and franchises Speedway and Stripes c-stores and the Laredo Taco Company, Speedy Cafe and Raise the Roost Chicken and Biscuits restaurant brands.
- 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.
Laval, Quebec-based Couche-Tard operates in 31 countries and territories, with more than 16,800 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. In Europe, under the Circle K and other banners, Couche-Tard operates a retail network in Scandinavia, Ireland, Poland, the Baltics and Russia with more than 2,700 stores and automated fuel stations. Through licensing agreements, more than 2,200 stores operate under the Circle K banner in 15 other countries and territories (Cambodia, Egypt, Guam, Guatemala, Honduras, Hong Kong, Indonesia, Jamaica, Macau, Mexico, Mongolia, New Zealand, Saudi Arabia, the United Arab Emirates and Vietnam).
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