(March 7): Canada’s convenience store and gas station operator Alimentation Couche-Tard Inc said it had held “exploratory discussions” with buyers for any US stores that would need to be divested to secure regulatory approval for a potential takeover of Japanese rival Seven & i Holdings Co. 

Couche-Tard executives, including founder and chairman Alain Bouchard, will visit Tokyo next week to try and advance discussions with Seven & i, and are also planning to hold a news conference on March 13 to publicly present their case for buying the company behind 7-Eleven stores.

“We have identified a potential divestiture portfolio of US stores,” Couche-Tard said in an emailed statement. “In collaboration with Seven & i, and to provide further assurance, Couche-Tard is having exploratory discussions with third parties to identify potential acquirers.”

Couche-Tard last year proposed to purchase the parent company of 7-Eleven for US$18.19 (RM80.57) per share, but so far hasn’t been able to enter negotiations with the company, which has sought to fend off the approach by pursuing a sweeping overhaul to unlock shareholder value. Seven & i has yet to convince investors, with the stock trading more than 20% below Couche-Tard’s proposed price of US$47.5 billion for the business.

Seven & i announced this week that it plans to sell an underperforming retail business and replace its chief executive officer, as well as a buy-back of shares worth ¥2 trillion (US$13.6 billion or RM60.07 billion) over the next few years, to strengthen its case for remaining independent.

Couche-Tard’s reaction to the flurry of changes reflects the quietly resolute approach that has seen it outlast a rival takeover bid from Seven & i’s founding family, which collapsed last month over lack of funding. The Canadian company has made clear that it wants to learn from the Japanese brand to improve its North America operation, and has ruled out going hostile in takeover talks.

Bouchard, as well as CEO Alex Miller and chief financial officer Filipe Da Silva, will attend the news conference in Tokyo, scheduled for 11am next Thursday, the company said.

Stephen Dacus, the board member leading the special committee evaluating the Couche-Tard offer, will take over Ryuichi Isaka as the CEO of Seven & i in May. The stock was mostly unchanged in Tokyo following the announcement of the restructuring measures, and is down about 15% this year.

The Japanese retailer said in Thursday’s news release that it is “committed to exploring all value creation opportunities, including active and constructive engagement” with Couche-Tard.

Seven & i also mentioned that there is a “consistent threshold issue” over the “serious US antitrust challenges that any transaction would face”, and that it has been working with Couche-Tard “to put together a potential divestiture package”.

“We believe there is a clear path to obtaining regulatory approvals of a transaction”, Couche-Tard said in the statement.

Seven & i has become by far the largest convenience store and gas station operator in the US with 12,600 locations, while Couche-Tard is just behind with 7,100 Circle K stores. Any acquisition by Couche-Tard would likely face an antitrust review by US regulators and force the retailer to divest as many as 2,500 stores, according to a Bloomberg Industries analysis.

Couche-Tard said in the statement that it “has a successful track record of 75 acquisitions since 2004, which have included working with US and other regulators”. The company has recently registered to open a Japan entity, and will operate a small office to work on the potential acquisition, according to people familiar with the matter who asked for anonymity discussing private decisions. 

Bloomberg News reported that Couche-Tard had yet to sign a non-disclosure agreement that would give the Canadian company access to detailed financial information that its board believes is necessary to make a formal binding offer, a common step in such negotiations.

The takeover saga is being closely watched as a test case of Japan’s openness to foreign capital, after recent governance reforms made it harder for businesses to ignore overtures that may raise value for shareholders.

“Shareholders believe there would be a great fit between the two companies,” Charles Emond, the head of Couche-Tard’s largest institutional investor, Caisse de Depot et Placement du Quebec, said in an interview. “This transaction is something that I know the founder has been contemplating for many, many years. They’ll be patient. I think their approach is the right one.”

“We told Couche-Tard if it ever moves forward, we’ll be there to support them significantly,” Emond added.

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Japan's Seven & i announces restructuring, new CEO to fend off US$47b takeover bid

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