Dive Brief:
- Seven & i Holdings and Alimentation Couche-Tard have begun identifying thousands of locations they could divest if they end up merging, according to announcements this week from both companies.
- Seven & i said that a divestiture package would likely have to include more than 2,000 overlapping locations in order to avoid antitrust pitfalls if the companies agreed to a deal. Seven & i said on Monday that the companies have also begun identifying potential buyers for these locations.
- This comes less than a week after Seven & i revealed several major changes across its organization, including a new CEO and a future initial public offering for 7-Eleven in North America. Some experts see these shifts as preparation for a deal with Couche-Tard.
Dive Insight:
When Couche-Tard submitted its bid to acquire Seven & i back in August, the Japanese retailer formed a “special committee” to review the proposal. Since then, the committee has met more than 30 times, including when it shut down Couche-Tard’s first bid just weeks after it was made.
The committee’s latest conclusion was that agreeing to sell 7-Eleven to Couche-Tard without first creating a plan to divest the overlapping c-stores would “put an unacceptable burden of risk” on Seven & i should the deal not materialize, Seven & i said on Monday. The Japanese retailer compared its situation to that of Kroger and Albertsons, whose proposed merger last year failed amid similar antitrust concerns.
“As responsible stewards of our shareholders’ capital, we will not blindly enter a transaction with no clear path to closing that could leave our company in a value destructive limbo for multiple years,” Seven & i said on Monday.
Seven & i approached Couche-Tard with these concerns, and the companies have agreed to seek a buyer or buyers for these overlapping stores before any deal is to be signed. The retailer did not specify where these thousands of stores are located, nor who its potential third-party buyers are.
Couche-Tard said on Monday that it had tried to get Seven & i to begin the collaborative process of divesting overlapping c-stores since late December, and that the Japanese retailer agreed to this process in February. However, the Canadian retailer added that it has just now received Seven & i’s consent to reach out to potential buyers.
Couche-Tard also did not specify how many stores this divestiture would include, but added that it would result in “a leading operator in the U.S., with national scale and exposure to attractive markets.”
“Couche-Tard would be committed to standing up the business with the infrastructure and leadership required to create a great business,” the company said on Monday. “We firmly believe that the divested business will be a strong and extremely viable competitor in the U.S. and will attract interest from credible buyers.”
Seven & i emphasized that no divestiture package is guaranteed, despite the progress it appears to be making with Couche-Tard.
“We and our advisors believe we can now make progress towards determining whether a credible and actionable remedy and divestiture package can be achieved that would allow a realistic assessment of ACT’s proposal under the areas we noted above — value and certainty of closing,” Seven & i said on Monday.
