Canada's Couche-Tard says U.S. store divestment plan clears path for Seven & i deal
Alimentation Couche-Tard Inc. said several potential buyers have made proposals to acquire convenience stores in the U.S. that overlap with Seven & i Holdings Co., showing progress toward a deal that could help the Canadian retailer win regulatory approval for its proposal to buy its Japanese rival.
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The two agreed earlier this year to discuss the potential divestment of more than 2,000 stores in the U.S. and seek out interested parties in order to address concerns by Seven & i over a merger being blocked by the U.S. Federal Trade Commission. Couche-Tard also pushed back against any parallels to the failed $24.6 billion merger of grocery chains Kroger Co. and Albertsons Cos.
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Seven & i, which operates 7-Eleven, Speedway and Sunoco stores, has pushed back against Couche-Tard's unsolicited ¥7.39 trillion ($51.3 billion) takeover proposal and is overhauling its business under new Chief Executive Officer Stephen Dacus to raise its value. Despite the resistance, Couche-Tard, the parent company of Circle K, has advanced discussions by securing a non-disclosure agreement two months ago to gain access to financial information and potentially raise its bid.
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'We have received multiple indicative proposals from highly experienced and credible buyers,' Couche-Tard said on a website it set up to explain its proposal to buy Seven & i. 'We believe the actionable, strong and broad level of interest so far clearly demonstrates that we have several clear paths to consummate the required divestitures and complete the transaction.'
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Several private equity firms have shown strong interest in buying the assets, Filipe Da Silva, Couche-Tard's chief financial officer, said in March.
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Couche-Tard also addressed some concerns over a potential merger by highlighting the differences between its proposal and the scuppered combination of Kroger and Albertsons. The FTC blocked the deal on antitrust grounds last year, saying that the divestiture plan was insufficient; Seven & i cited this as a high-risk factor for getting a deal with Couche-Tard approved.
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'The convenience store industry in the U.S. is highly fragmented and competitive,' Couche-Tard said. 'The combination of Couche-Tard and Seven & i results in a business with less than 13% of U.S. convenience stores.'
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The Canadian retailer also reiterated that it has put 'forth a compelling reverse termination fee' in the event of a transaction not going through.
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