Couche-Tard Eyes Sweeter Deal to Entice 7-Eleven Operator Amid Rejection and Regulatory Hurdles

Alimentation Couche-Tard, the Canadian convenience store giant, is reportedly considering improving its acquisition proposal to convince Seven & i Holdings, the operator of 7-Eleven stores, to negotiate. According to sources familiar with the matter, Couche-Tard has been evaluating how much it can increase the potential purchase price to entice Seven & i Holdings into discussions. It is suggested that to bring Seven & i Holdings to the negotiating table, the offer must significantly exceed the initial proposal of $14.86 per share.

In light of the current developments, Seven & i Holdings recently announced its decision to reject Couche-Tard’s acquisition offer, which had an estimated transaction value of approximately $38.5 billion. In a letter to Couche-Tard, Seven & i's special committee concluded that the proposal severely undervalued Seven & i's intrinsic value and the opportunities to unlock that value. The committee also raised concerns about potential regulatory challenges in the U.S. under the current competitive law environment.

Seven & i emphasized that Couche-Tard did not sufficiently address how the merger would impact the competitive landscape. The letter stated that aside from vague assurances of potential divestitures, there were no clear strategies or timelines provided to overcome regulatory hurdles. Seven & i’s board expressed confidence in its unique asset’s strategic position within the global convenience store industry and its ability to unlock shareholder value through ongoing strategic initiatives.

If Seven & i were to accept the acquisition offer from Couche-Tard, it could become the largest overseas acquisition in Japanese history, creating the world’s largest convenience store operator. However, industry observers have pointed out that even if an agreement is reached, the acquisition might face significant antitrust regulatory barriers.

Couche-Tard has been actively pursuing this acquisition. In late August, Couche-Tard’s shareholder Artisan Partners sent a letter to Seven & i's board, recommending they seriously consider the offer and urging the board to provide an update on the situation by mid-September. Seven & i responded by urging Couche-Tard to reconsider various aspects of the proposal, including the purchase price, and indicated that further negotiations would be necessary even if the offer were raised.