Alimentation Couche-Tard Inc. (TSX: ATD.B) has submitted a revised takeover offer for Japan’s Seven & i Holdings, the parent company of 7-Eleven, valuing the Japanese firm at $47 billion. This offer represents a 20% increase from the initial $40 billion proposal, signaling the Canadian company’s continued interest in expanding its global reach.
If successful, this acquisition would mark the largest foreign buyout of a Japanese company, further solidifying Couche-Tard’s position as a major player in the global convenience store market. However, the potential deal is fraught with regulatory concerns and geopolitical complexities that could shape its outcome.
First offer rejected
The first offer from Couche-Tard, submitted in August 2024, was quickly rejected by Seven & i. The Japanese company stated that the $40 billion proposal “grossly undervalues” its business, which spans convenience stores, supermarkets, and financial services, in addition to the 7-Eleven franchise.
Seven & i also warned that the deal could face significant regulatory hurdles in the U.S., where antitrust concerns loom large. In its letter rejecting the offer, Seven & i pointed to U.S. competition law as a significant barrier.
“The proposed purchase does not adequately acknowledge the multiple and significant challenges such a transaction would face from U.S. competition law enforcement agencies,” the company said on September 6.
Despite these setbacks, Couche-Tard remains persistent. “We believe this transaction offers clear strategic and financial benefits for both companies and their stakeholders,” the Canadian company stated.
Revised offer
Couche-Tard’s increased bid, submitted on September 19, appears to be a clear indication of its commitment to acquiring Seven & i. Although the revised offer has been made, no substantive discussions have taken place since then, according to reports.
Seven & i Holdings confirmed on Wednesday that it had received the revised offer but did not disclose any further details.
“As requested by ACT [Alimentation Couche-Tard], the Company has maintained, and intends to continue to maintain, the confidentiality of its current discussions with ACT,” Seven & i said in a brief statement.
The company’s stock responded positively to the news, surging 4.7% by the close of trading on Wednesday, with an earlier peak of nearly 9.5%. Analysts suggest that the increase in Couche-Tard’s offer shows the seriousness of its ambitions.
“Couche-Tard’s willingness to raise its bid by 20% demonstrates its strong interest in expanding its global footprint,” said Kai Li, a professor of corporate governance at UBC Sauder School of Business. “They want to become truly global, and acquiring Seven & i is a critical step in achieving that goal.”
Regulatory hurdles
Despite the financial potential, regulatory scrutiny remains a significant obstacle. A merger between Couche-Tard and Seven & i would create a network of more than 100,000 convenience stores globally, raising concerns about market dominance. Currently, Couche-Tard operates around 17,000 stores, with Circle K being one of its most prominent brands.
Yan Cimon, a professor of strategy at Laval University, highlighted the potential for antitrust issues: “This deal might raise antitrust concerns, given that the combined entity would have significant market power, particularly in North America,” Cimon said.
Neil Saunders, managing director of GlobalData, echoed this sentiment, noting that U.S. regulators are particularly sensitive to consolidation in industries like food and essentials.
“The levels of concentration will almost certainly attract Federal Trade Commission scrutiny, which, given the current negative sentiment around consolidation and competition in this space, will not make this deal an easy one,” Saunders stated in an earlier interview.
Beyond the U.S., the Japanese government’s recent decision to designate Seven & i as a company “critical to national security” adds another layer of complexity. This classification could lead to additional reviews of the takeover by Japan’s government, especially in light of foreign investment in companies considered strategically important.
Japanese corporate culture has traditionally been cautious regarding foreign takeovers, and Seven & i’s situation is no different. Despite efforts by the Japanese government to make acquisitions easier, there remains a strong resistance to change, particularly for large conglomerates like Seven & i.
Couche-Tard’s previous failed attempt to acquire French grocer Carrefour in 2021, blocked by the French government over national security concerns, serves as a reminder of how political considerations can derail ambitious plans.
To fend off Couche-Tard’s advances and address shareholder pressure, Seven & i recently announced plans to streamline its operations. This includes setting up a holding company, York Holdings, for its non-core assets, which will allow it to focus more on its convenience store business.
Reports also indicate that the company is considering changing its name to “7-Eleven Corp” by May 2025, a move that aligns with its intent to emphasize its core business.
“Seven & i is making it clear that it is focusing on convenience stores, and this may help it maintain control while resisting a full takeover,” added Saunders.
If the acquisition succeeds, it would not only expand Couche-Tard’s footprint but also mark a transformative moment in the convenience store sector. With over 85,000 7-Eleven outlets worldwide, Seven & i dominates the market, particularly in Japan, where 7-Eleven is an essential part of daily life. Couche-Tard’s acquisition would enable it to gain a foothold in Asia, further solidifying its global position.
Information for this briefing was found via AFP, Japan Today, Business Standard, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
