Couche-Tard abandons 6.8 trillion yen bid to buy 7-Eleven owner

[TOKYO] Canada’s Alimentation Couche-Tard has abandoned its 6.8 trillion yen (S$59 billion) bid to buy Seven & i Holdings, saying the Japanese operator of 7-Eleven convenience stores had refused to engage meaningfully during the almost year-long pursuit.

“There has been no sincere or constructive engagement from 7&i that would facilitate the advancement of any proposal, contrary to comments made publicly by 7&i representatives,” Couche-Tard said in a letter to Seven & i’s board, released late Wednesday (Jul 16). “Rather, you have engaged in a calculated campaign of obfuscation and delay, to the great detriment of 7&i and its shareholders.”

Seven & i’s stock, which is up more than 25 per cent since Couche-Tard’s interest became public 11 months ago, will probably decline due to the withdrawn proposal.

The Japanese retailer has sought to make a case for remaining independent and made sweeping changes, appointing Stephen Dacus as chief executive officer, the sale of its superstore business for US$5.4 billion, a share buyback programme worth two trillion yen and a listing of its US business.

“As we have expressed many times, we do believe that fully combining our two companies is the most straightforward and effective way to maximise value to all stakeholders,” Couche-Tard said in the letter signed by chairman Alain Bouchard and CEO Alex Miller.

“We believe this combination has the ability to enhance that path. However, we are not able to effectively pursue this combination without deeper and genuine further engagement from 7&i leadership and the special committee.”

Representatives for Seven & i did not immediately respond to requests for comment.

Before the proposal to buy Seven & i became public, an attempt to acquire such a well-known Japanese business at such scale were seen as audacious and unlikely, given the protectionist tendencies of the government and corporate boards prioritising stability over shareholder value.

That view may remain in place for a while, despite changes to corporate guidelines aimed at injecting more vigour into corporate Japan through improved governance and protections for investors.

Couche-Tard, which operates Circle K stores globally, disclosed that it has proposed alternate arrangements for a deal, including buying the Seven & i’s international business and taking a minority stake in the Japanese business.

Bouchard, who co-founded Couche-Tard, said in March that there was a possibility of “enhancing” the buyout proposal with better access to financial information.

Since then, the two parties signed a non-disclosure agreement to share information, but Couche-Tard said in the letter that the level of engagement was not enough.

Most of the information shared by Seven & i was minimal of already publicly available, and meetings with management were superficial or tightly scripted, Couche-Tard said. “None of our critical questions were answered,” the company added.

Seven & i has cited concerns over potential pushback from US antitrust regulators over any deal to combine with Couche-Tard. In order to address this risk, the two sides agreed earlier this year to seek potential buyers for about 2,000 North American convenience stores.

Although several parties expressed interest in acquiring the stores, Seven & i did not share “required information with potential buyers, which is inconsistent with our collective objectives and does not reflect a constructive intent”, Couche-Tard said. BLOOMBERG