Couche-Tard chief dismisses Seven & i break-up plan and urges talks on $47bn deal

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Alimentation Couche-Tard’s proposed $47bn buyout of Seven & i is a better deal and less risky than its target’s break-up plan, the Canadian retailer’s chief said in Tokyo as he urged the Japanese group to start talks.

Couche-Tard executives said on a trip to Japan that they wanted more information on Seven & i’s business and the chance to discuss their bid with government officials who would have to review any deal.

Their visit comes after the Canadian company increased its offer for the 7-Eleven owner by 20 per cent and follows an announcement from the Japanese group that it planned to split its convenience store operations from non-core businesses, a move investors and analysts said was an attempt to fend off the bid.

“We think [our offer is] more compelling than what was proposed last week, with a great deal more certainty and much less risk,” said Alex Miller, the recently appointed chief executive and president of Couche-Tard.

“Our offer is a certainty, right, it’s cash, versus a hope that [Seven & i] can continue to execute on a plan that’s not delivered value over the last years,” added Brian Hannasch, the company’s former chief executive and now special adviser to the group.

The comments were made during a joint interview in Tokyo that included Couche-Tard’s chief financial officer and its billionaire founder, Alain Bouchard, who has been targeting Seven & i for roughly 20 years. Couche-Tard made an offer for the group in 2020 before the Covid-19 pandemic derailed the plan.

The Canadian company launched a $39bn bid for the Japanese group that was made public in August. Seven & i rejected the offer, saying it “grossly” undervalued the business and did not account for the difficulty of getting a deal past US competition regulators.

Miller on Thursday said the group was confident of being able to handle US antitrust scrutiny. “We . . . are prepared to make significant divestments as part of this transaction,” he said. “Our goal is to engage in these substantive discussions.”

However, Bouchard said Seven & i, the Japanese group’s founding Ito family and government officials had so far refused a meeting. “We’re here . . . because of our compelling offer we have made to Seven & i. And we hope to be able to have access to the internal information that we need to look at,” said Bouchard.

Couche-Tard believes the government will eventually engage in talks once Japan’s ongoing parliamentary election campaign is over.

One person familiar with the situation said that while a meeting had yet to be agreed, the two companies had been discussing the terms under which one might take place.

Couche-Tard recently sent Seven & i a new potential acquisition price of close to $47bn. The bid, which if completed would be the biggest foreign takeover of a Japanese company, is being considered by a special Seven & i committee.

“We are interested in the entirety of Seven & i, absolutely, including Japan,” confirmed Miller, adding that they would keep local operations intact.

The group’s chief financial officer, Filipe Da Silva, added that financing the deal would not be an issue and that it was holding talks with Japanese financial institutions and partners who could help fund the deal while allowing its investment-grade credit rating to be maintained.

Seven & i’s stock price has risen more than 30 per cent since the first Couche-Tard offer in August. But at ¥2,218 ($15) a share, it is still below the Canadian company’s latest bid of closer to $18.

Some investors are putting pressure on Seven & i to review the offer. US-based Artisan Partners told the Japanese group’s board in a letter this week that Couche-Tard’s offer was “clearly superior to the speculative value that could potentially be achieved by implementing the restructuring plan”.