Canadian convenience store giant Alimentation Couche-Tard has reaffirmed its interest in 7-Eleven parent Seven & I Holdings following the latter’s rejection of its $38.5 billion buyout bid, saying that both sides could successfully reach a “mutually agreeable” deal.
Couche-Tard said in a release that a combination with Seven & I has clear strategic and financial benefits for both companies’ customers, employees, franchisees and shareholders.
“Together, we would create a leading global retail platform with over 100,000 sites spanning Asia-Pacific, North America, Australia, and Europe. Our complementary businesses, shared values and excellent strategic fit would allow us to achieve significantly more together than we could individually,” the company added.
The Circle K parent made the offer last month, with the value disclosed on Friday as US$14.86 per share, equivalent to $38.5 billion. However, Seven & I said the proposal was inadequate and was not in the interest of shareholders.
The Japanese company said in a letter it would “resist any proposal that deprives our shareholders of the company’s intrinsic value that fails to specifically address very real regulatory concerns”.
In the response, Couche-Tard said it was “disappointed” in Seven & I’s refusal to engage in friendly discussions. The requests to have a discussion between two companies’ advisors and to enter into a Non-Disclosure Agreement were all rejected, it elaborated.
“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,” the company stated.
Regarding regulatory concerns, Couche-Tard suggests the two companies jointly consider divestitures to secure approvals in the US. Meanwhile, in Japan, it believes there are certainly solutions to meet any regulatory needs while securing the ecosystem Seven & I has successfully created.
“Couche-Tard has a strong history of partnership, always maintaining and learning from local leadership and employees, and empowering local leaders and operators with resources to enable them to keep serving their customers and communities,” the company said.
The Canadian firm added it has sufficient capacity to finance the transaction in cash and that financing would not be a condition to closing a transaction. It also highlighted the fact that it has generated a total shareholder return of over 450 per cent in the last 10 years.
“In summary, we remain highly focused on consummating a transaction with Seven & I that is in the best interests of all constituencies.
“We standby prepared to enter into collaborative and friendly discussions with Seven & I to focus on finding greater value for Seven & 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,” Couche-Tard concluded.
In a statement released later, Couche-Tard was unrelenting.
“As our board has previously discussed and stated, we do not believe that the proposal ACT put forward provides a basis for us to engage in substantive discussions regarding a potential transaction. This is precisely why we have not asked our advisors to engage in further discussions or signed an NDA,” the statement read.
“We remain open to engaging in sincere discussions should ACT put forth a proposal that fully recognises Seven & I’s standalone intrinsic value and addresses the special committee’s very real regulatory concerns. Unless and until ACT does so, Seven & I will focus on executing its business and pursuing the actionable avenues we see to realise and unlock shareholder value in the near- to medium-term.”
