In what could easily be called the biggest mergers-and-acquisitions deal in the history of the convenience-store industry—should it be allowed to happen—Alimentation Couche-Tard Inc., the parent company of the Circle K convenience-store brand, is seeking to acquire Seven & i Holdings Co. Ltd., the parent company of 7-Eleven Inc., in a deal valued at $38 billion. Couche-Tard has submitted a friendly, nonbinding proposal to Seven & i, which has confirmed that it has received the confidential, nonbinding and preliminary acquisition proposal.
7-Eleven, which is No. 1 on CSP’s 2024 Top 202 ranking of U.S. c-store chains by size, operates, franchises or licenses more than 83,000 convenience stores in 19 countries and regions, including more than 13,000 in the United States. In addition to 7-Eleven c-stores, the Irving, Texas-based company operates and franchises Speedway and Stripes c-stores.
Alimentation Couche-Tard, Laval, Quebec, is No. 2 on CSP’s Top 202 ranking. It operates in 29 countries and territories, with more than 16,700 convenience stores. Its network includes more than 7,100 c-stores in the United States, primarily under the Circle K and Holiday Stationstores banners.
Seven & i's market capitalization was approximately 4.6 trillion yen ($31.5 billion) as of Aug. 16, according to a report by Nikkei Asia. If Couche-Tard buys 100% of Seven & i, the deal would have a value of at least 5 trillion yen ($34.13 billion), said the report. News of the offer triggered a 23% rise in Seven & i's share price, said a Wall Street Journal report. After the rise, Seven & i’s market capitalization stood at 5.6 trillion yen ($37.9 billion), according to the newspaper.
Federal regulators have yet to weigh in on the possible transaction over anti-competitive issues that could require divestment of stores. On the same day it revealed the bid for Seven & i, Couche-Tard also announced that if has agreed to acquire approximately 270 GetGo Café + Markets convenience stores and fueling locations in Pennsylvania, Ohio, West Virginia, Maryland and Indiana from Pittsburgh-based supermarket retailer Giant Eagle Inc.
“While the Giant/GetGo acquisition is a real score, the unsolicited offer for 7-Eleven is a gigantic development,” Ken Shriber, managing director of Petroleum Equity Group Ltd., Chappaqua, New York, which advises the downstream fuels and c-store industry and provides mergers-and-acquisitions services, told CSP. “This is a very early-stage event and, therefore, it’s hard to say how 7-Eleven and its shareholders will react, as the Seven & i and 7-Eleven companies had their own bold growth initiatives,” he said.
For example, in 2021, 7-Eleven acquired 3,800 Speedway c-stores from Marathon Petroleum Corp.—at $21 billion, then the biggest acquisition in the history of the U.S. c-store industry. CrossAmerica Partners LP entered into an agreement to acquire 106 c-store properties from 7-Eleven for $263 million, made up of company-operated sites that 7-Eleven sold as part of the divestiture process in connection with the Speedway deal.
With a 7-Eleven deal, Shriber said, “what is likely is that Alimentation Couche-Tard will face Federal Trade Commission scrutiny in the United States, particularly where both companies have significant store counts, such as Texas, California, Florida and other Mid-Atlantic and Northeast states.”
When 7-Eleven Inc. acquired Sunoco’s more than 1,000 c-stores in 2018 for $3.3 billion, the FTC required both companies to divest a number of stores to resolve anti-competitive issues.
“In most consumer industries if the No. 2 company proposed to buy the No. 1 company, there would be an anti-trust problem,” consultant Gerald Lewis told CSP. “The interesting thing is there probably will not be with Couche-Tard and 7-Eleven, because while they both have a huge number of stores, the individual stores are not particularly dominant, so it is difficult to make the case that there would be any loss of competition affecting the consumer.”
He added that the “7-Eleven and Circle K brands are so strong that I would not expect either of them to be abandoned—7 Eleven has retained the Speedway and other brands it has acquired. I don’t think that this deal, as big as it would be, would have a major impact on the c-store business. The extent of the impact could be in the sharing of programs like Slurpees across both chains.”
Casey’s Déjà Vu
Before this current M&A move, in 2010, Couche-Tard made a bid for Casey’s General Stores and its then approximately 1,500 c-stores. Couche-Tard tried and failed to make a similarly bold acquisition with the attempt to acquire Casey’s for $1.85 billion. The Ankeny, Iowa-based chain, currently No. 3 on CSP’s Top 202 list of U.S. c-store chains by size, was then already among the top five chains in the country. Casey’s rejected several offers from Couche-Tard and took measures to prevent a hostile takeover. Later, 7-Eleven also became a bidder for Casey’s, a move Casey’s also rebuffed.
“The thought of an overseas company taking over a venerable Midwestern company like Casey’s with a rural niche was offensive and over the top,” said Mitch Morrison, vice president of retailer relations for CSP parent company Informa Connect Foodservice. “7-Eleven doesn't quite have the same continuous down-home roots as Casey's [although it does have its beginnings in Texas]. But it is universally recognized as the first true American c-store and is the face of the industry.”
So Couche-Tard’s move on Seven & i is far from certain.
“The company is focused on reaching a mutually agreeable transaction that benefits both companies’ customers, employees, franchisees and shareholders,” Couche-Tard said in a statement Monday acknowledging the bid for Seven & i. “There can be no certainty at this stage that any agreement or transaction will be reached. The company does not anticipate issuing any further public statements regarding discussions with Seven & i unless or until an agreement is reached.”
The Seven & i board of directors has formed a special committee, comprised solely of independent outside directors, led by Stephen Hayes Dacus as chairperson, to review the proposal, the Tokyo-based company said.
“Consistent with its obligation to act in the best interest of its shareholders and other stakeholders of the company, the special committee intends to conduct a prompt, careful and comprehensive review of the proposal, the company’s standalone plans and other alternatives for enhancing corporate value, after which a response will be made to ACT,” it said. “Neither the board of directors nor the special committee has made any determination at this time to either accept or reject the proposal from ACT, to enter into discussions with ACT or to pursue any alternative transaction. The company will promptly announce when the company decides or has matters to be disclosed.”
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