WJR News

Alimentation Couche-Tard (ATD.TO), the Canadian company behind the Circle-K brand, has expressed its willingness to engage in confidential discussions with Seven & i Holdings (3382.T), the Japanese owner of 7-Eleven, after its $38.5 billion takeover offer was rejected. Despite the rejection, Couche-Tard remains interested in pursuing the buyout, calling for talks to explore a possible agreement.

Shares of Seven & i rose 2.2% on Monday, trading at 2,179.5 yen ($15.25), slightly above Couche-Tard’s all-cash proposal of $14.86 per share, which was turned down last Friday. Seven & i claimed the offer wasn’t in the best interests of its shareholders and raised concerns about potential antitrust challenges in the U.S., where the combined company would dominate the convenience store market.

Couche-Tard Responds with Flexibility

In response to the rejection, Couche-Tard reiterated its desire to pursue the acquisition and indicated its willingness to consider divestitures necessary to obtain regulatory approvals. The Canadian company said it believes the proposed merger would provide a compelling combination, addressing all regulatory concerns in Japan and potentially other regions.

“Given the mutual benefits of a combination, we are disappointed in 7&i’s refusal to engage in friendly discussions,” Couche-Tard said in a statement. “We are highly confident that collaborative discussions would lead to our ability to find increased value for 7&i shareholders.”

Financing Confidence for the Deal

Couche-Tard further emphasized its confidence in financing the deal, stating that it had secured a letter from its financial advisor expressing a high level of certainty in arranging the necessary funds. According to LSEG data, this proposed acquisition would be the largest-ever foreign takeover of a Japanese company and the biggest all-cash offer since Elon Musk’s $40.2 billion purchase of Twitter in 2022.

“We have secured a letter from our financial advisor stating that it is highly confident that it is able to arrange the financing for the proposed transaction, subject to customary conditions,” Couche-Tard said in its Sunday statement.

Seven & i Remains Cautious

Despite the substantial offer, Seven & i Holdings continues to voice concerns over the deal. The company stated on Friday that even a “very significant” increase in the offer might not alleviate its reservations about the takeover’s feasibility. In particular, the company highlighted potential challenges in securing regulatory approvals, especially in the U.S. market, where antitrust issues could arise.

The Canadian firm’s bid would create the largest convenience store operator in the U.S., raising concerns about monopoly risks and regulatory hurdles.

A High-Stakes Takeover

If the deal were to move forward, it would mark a monumental transaction, significantly reshaping the global convenience store landscape. Couche-Tard’s push for a combination with Seven & i Holdings demonstrates its ambition to strengthen its position in the international retail market, but it faces considerable challenges in overcoming antitrust regulations and securing a deal that satisfies both parties.