Japan’s Seven & i Holdings has confirmed that discussions are underway with Canada’s Alimentation Couche-Tard (ACT) regarding a potential sale of stores, a move aimed at addressing antitrust concerns and paving the way for Couche-Tard’s $47 billion takeover bid.
The talks come amid increasing regulatory scrutiny in the U.S. convenience store market, where both companies hold dominant positions.
Exploring Divestitures to Overcome Antitrust Hurdles
Seven & i, the operator of 7-Eleven, has long expressed concerns about U.S. antitrust laws acting as a barrier to any potential merger with Couche-Tard, as the two companies collectively control around 20,000 convenience store locations across the U.S. To navigate these legal challenges, Seven & i has proposed a divestiture process to assess whether selling certain stores could make a deal feasible.
In response, Couche-Tard recently stated that it is engaged in exploratory discussions with third parties to identify potential buyers for some of its U.S. stores. Seven & i acknowledged that Couche-Tard has now agreed to jointly explore the viability of divestitures, marking a significant step forward in the negotiations, Reuters reported.
Special Committee’s Role in Evaluating the Deal
Seven & i has established a Special Committee of independent directors to review the ACT proposal and any alternatives that could maximize shareholder value. Since the proposal was received, the committee has held over 30 meetings to analyze its feasibility, particularly regarding the likelihood of regulatory approval.
The committee highlighted that divesting 2,000 or more overlapping stores presents significant challenges. A key concern is whether a credible and independent buyer can be identified who can sustain competition in the market post-divestiture. The committee referenced the Albertsons-Kroger merger, which failed due to similar antitrust concerns, as a cautionary example.
To mitigate risks, Seven & i proposed three possible approaches for Couche-Tard:
- A full-scale divestiture of all overlapping stores (including Couche-Tard’s Circle K locations in the U.S.) to eliminate antitrust concerns.
- Signing a definitive divestiture agreement with a buyer before finalizing the merger.
- Conducting preliminary joint work with Seven & i to assess the viability of divestitures before signing a definitive agreement.
Seven & i has confirmed that Couche-Tard has agreed to proceed with the third option, and financial advisors from both sides have begun reaching out to potential buyers.
Alongside the ongoing merger talks, Seven & i announced a leadership transition, appointing Stephen Hayes Dacus as its new CEO. The company emphasized that the decision followed a rigorous nomination process, which included an extensive search for internal and external candidates.
However, Artisan Partners, a U.S.-based investor in Seven & i, has expressed opposition to the CEO succession plan, arguing that the company should reconsider Couche-Tard’s takeover offer more seriously. In response, Seven & i defended its independent review process, reiterating its commitment to maximizing shareholder value while ensuring regulatory compliance.
