Couche-Tard 'disappointed' at Seven & i's approach to takeover bid

Canadian convenience store giant Alimentation Couche-Tard Inc said Tuesday it is "disappointed" at what it described as its Japanese rival Seven & i Holdings Co's "very limited" engagement with its takeover proposal.

Couche-Tard was responding to a proposal by the operator of the 7-Eleven convenience store chain that the Canadian firm sell all of its stores in the United States as an option to address antitrust concerns generated by a potential merger between the two companies.

"We...continue to be disappointed that engagement has been very limited, and focused only on the path to U.S. regulatory approval," Couche-Tard, the operator of Circle K convenience stores, said in a statement.

"We firmly believe there is a clear path to regulatory approval in the U.S.," the company said, noting that the U.S. convenience store market is "highly fragmented, with over 150,000 stores nationally."

Both Couche-Tard's and Seven & i's stores operate in the United States "in competition with a wide array of brick and mortar and online food and merchandise providers," and the two companies largely operate "in complementary markets" across the United States, Couche-Tard said.

It also said it shared with Seven & i in late December a detailed proposal outlining the "firm commitments we would be willing to make with respect to U.S. regulatory approvals" and that it is seeking to "reach out to potential buyers of the stores to be divested."

The Seven & i directors' letter to shareholders, which was made public on Monday, "goes into great detail" about its perspective on the process for obtaining U.S. regulatory approval, but "this is not the view of Couche-Tard," the statement said.

Also in the letter, the Japanese retailer showed an alternate path forward, telling the Canadian company to finalize a deal to sell some 2,000 stores identified as posing an antitrust risk based on their location "as a condition precedent" to signing a merger agreement.

Couche-Tard plans to hold a press conference Thursday in Tokyo.

The company also disclosed in the statement that it submitted on Jan 24 a "revised, yen-denominated, non-binding" buyout proposal at the request of Seven & i, without elaborating.

The Canadian company emphasized it has "no concerns" about its ability to procure the necessary funds, with support from Goldman Sachs Group Inc., Royal Bank of Canada and Scotiabank, which is also based in Canada.

Seven & i said in August that it had received a takeover proposal from Couche-Tard. The offer was later raised to exceed 7 trillion yen, according to a source familiar with the matter.

The Japanese company earlier sought to fend off the takeover bid with a management buyout plan by the retailer's founding family, but the move ended in failure due to a lack of interested investors.

Earlier this month, Seven & i said it appointed outside director Stephen Dacus as CEO to replace Ryuichi Isaka, as it seeks to maximize its corporate value through a massive share buyback and restructuring under the new leadership.