Alimentation Couche-Tard Inc. is keeping up its pursuit of Seven & i Holdings Co. but has yet to gain access to the Japanese company’s financials, months after proposing a takeover, people with knowledge of the matter said.
A competing ¥9 trillion (US$60 billion) proposal by the founding Ito family and Itochu Corp. to take the operator of 7-Eleven stores private has stalled over disagreements about management control, people familiar with the discussions said this week.
That may leave Seven & i with little choice but to enter talks with Couche-Tard, the owner of the Circle K chain, which has proposed to take over the Japanese retailer for about $47 billion.
Couche-Tard signaled its interest more than six months ago, then increased its proposed price in September. But the two sides have yet to sign a non-disclosure agreement that would give the Canadian company access to detailed financial information that its board believes is necessary to make a formal binding offer, a common step in such negotiations.
Executives from Couche-Tard have visited Japan several times since Executive Chairman Alain Bouchard showed up in October to personally make his case to buy Seven & i. Earlier this month, a group from the Canadian company visited Fukushima and Sendai to understand the role that 7-Eleven and convenience stores played in disaster-relief efforts when a massive earthquake struck the region in 2011.
“Couche-Tard remains committed to reaching a mutually agreeable transaction that benefits both companies’ customers, employees, franchisees and shareholders, creating a global retail champion,” the Canadian firm said in a statement emailed by an outside spokesperson. “We look forward to working constructively with Seven & i to reach a friendly agreement.”
Representatives for Seven & i didn’t immediately reply to requests for comment.
Seven & i had sought, and gained, designation as a “core” business entity by the Japanese government in September after Couche-Tard’s approach became public. In its application for the change in status under the Foreign Exchange and Foreign Trade Act, Seven & i argued that its convenience stores play a critical role in supplying food and supplies in the event of natural disasters. Foreign entities hoping to purchase more than 10% of shares in a core company must give prior notification.
The heirs of Seven & i founder Masatoshi Ito, who died in 2023, and Itochu have yet to reach consensus on the composition of the board after it is taken private, said the people, who asked not to be identified because the information isn’t public. The Nikkei newspaper reported that Itochu was set to pull out of the deal.
A special committee of Seven & i’s board is evaluating the management buyout proposal and Couche-Tard’s approach, Seven & i Chief Financial Officer Yoshimichi Maruyama said in January, adding that the company didn’t have enough information to evaluate them. Seven & i’s management will decide what the best course of action will be, with an eye toward the shareholders’ meeting in May, the CFO said.
Couche-Tard’s latest approach is at least its third attempt in two decades to enter a deal with Seven & i. Not long after buying the Circle K chain in 2003, founder Bouchard went to Tokyo to meet with Ito to declare his interest in the US operations, according to a biography published several years ago. He was turned away.
After the Japanese retailer rebuffed the Canadian company’s initial approach as being too low last year, it increased its proposed price for Seven & i to $18.19 per share.
The fate of Seven & i is being seen as a key test of whether corporate Japan, long considered impenetrable for inbound mergers and acquisitions, is ready for change. A successful acquisition of Seven & i would also mark the biggest-ever takeover of a Japanese company.
Seven & i, meanwhile, has sought to fend off Couche-Tard by embarking on a radical plan to overhaul its operations, splitting the company into two. One business will be focused on 7-Eleven, convenience stores and gasoline stations, while the other will be a collection of less profitable retail operations that might bring in strategic partners and eventually be listed separately.
Despite the lack of engagement with the special committee, Couche-Tard executives remain intent on entering negotiations with Seven & i, the people said.
“We have invited them, we have tried to organize a meeting, but it didn’t work — but it will eventually,” Bouchard said in an interview in Tokyo in October.
Reed Stevenson and Mathieu Dion, Bloomberg News
