Alimentation Couche-Tard and Seven & i’s war of words continued this week, with both retailers releasing new statements on their stalemate over a proposed merger.
Couche-Tard, parent company of Circle K, said in a Sunday letter that it was disappointed in Seven & i’s “refusal to engage in friendly discussions” about the proposed acquisition. The offer, made for an estimated $39 billion, would see Couche-Tard acquire 7-Eleven — the world’s largest convenience retailer. The combined company would potentially have more than 100,000 stores around the globe.
In an announcement issued Monday, Seven & i countered that “we do not believe that the proposal ACT put forward provides a basis for us to engage in substantive discussions regarding a potential transaction.”
The initial offer was for $14.86 per share, or a total of nearly $39 billion at Friday’s exchange rate. Seven & i said on Friday that the offer “grossly undervalues” its business and noted that it felt Couche-Tard didn’t adequately address regulatory concerns or understand 7-Eleven’s importance to Japanese society.
Couche-Tard acknowledged in its letter that although it would like to continue talks, Seven & i has not made the process easy.
“We requested to have our advisors engage in discussions with the advisors to [Seven & i] which was rejected,” the company wrote in its letter. “We offered to enter into a Non-Disclosure Agreement (‘NDA’) to enable both sides to share information to find more value, and this request was also rejected.”
Couche-Tard wrote that if the companies enter into an NDA, it could “refine” its regulatory proposal. When addressing Seven & i’s regulatory concerns, Couche-Tard pointed to the U.S.’s “highly fragmented” c-store market. It also emphasized that Circle K and 7-Eleven “largely operate in complementary markets across the U.S.”
Both companies also have experience with divesting stores to gain regulatory approval, which could help build a satisfactory package to address regulatory concerns, Couche-Tard’s letter said.
Couche-Tard acknowledged that 7-Eleven stores in Japan play a vital role in both everyday life and emergency response that it would take into consideration after a potential acquisition.
“When entering new markets, Couche-Tard always takes a humble approach,” the letter said. “We would respect how [Seven & i] operates in Japan.”
Finally, Couche-Tard clarified that it “has a very strong balance sheet and strong investment grade credit ratings,” which it said should prevent financing from being a roadblock to the deal.
The Canadian retailer said its acquisition history reflects a high level of discipline, and that it plans to take the same approach regarding a potential deal with Seven & i.
“We stand by prepared to enter into collaborative and friendly discussions with [Seven & i] to focus on finding greater value for [Seven & i] and its shareholders, providing regulatory certainty and ensuring that the combined entity continues to be the leader and provider of premier offerings in the markets we both serve.”
Seven & i said Monday it would be open to discussions if Couche-Tard first submits a better proposal.
