Alimentation Couche-Tard makes revised offer for 7-Eleven owner

The convenience store giant behind Circle K is not giving up its hope of taking over the Japanese owner of its international rival, 7-Eleven.

Seven & i Holdings Co. Ltd. said in a Wednesday statement that it had received a revised confidential, private and non-binding proposal from Alimentation Couche-Tard.

The Laval, Que.-based business, which also owns stores under the Couche-Tard and Ingo banners, did not immediately respond to a request seeking confirmation of the proposal or details about its value.

Bloomberg and Reuters reported that the new bid values Seven & i at US$47 billion, about 22 per cent higher than an offer of $38.6 billion Couche-Tard made in August.

The Japanese company rebuffed the earlier bid, saying it “grossly undervalues” the potential of its convenience store business, while not fully addressing U.S. regulatory concerns.

The refusal “disappointed” Couche-Tard, which said in September that it remains focused on reaching a deal.

The company argued its proposal offers clear strategic and financial benefits and has said it believes the two companies can reach a mutually agreeable transaction.

For Couche-Tard, there are many benefits to acquiring Seven & i.

Couche-Tard operates across 31 countries, with more than 16,800 stores. A successful deal with Seven & i could add 85,800 stores to its network.

Seven & i owns not only the 7-Eleven chain, but also supermarkets, food producers, household goods retailers and financial services companies.

Acquiring Seven & i won’t be easy, even for a giant like Couche-Tard. Competition and dominance concerns are swirling across many global markets and analysts say regulatory approvals might not be difficult to nab.

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“The levels of concentration will almost certainly attract Federal Trade Commission scrutiny which, given the current negative sentiment around consolidation and competition in the food and essentials space, will not make this deal an easy one,” said Neil Saunders, managing director of GlobalData, in an email, when news of Couche-Tard’s bid first broke.

Japanese sentiment also adds “complexity” to the bid.

“Although there have been reforms in the country to make takeovers easier, most Japanese firms are very cautious and resistance to change. That includes Seven & i, whose complex operating model also hampers a deal,” he said.

Last month, Couche-Tard’s battle to buy Seven & i became tougher when the Japanese company was classified as “core” to national security.

If the deal winds up scuttled, it wouldn’t be the first time Couche-Tard has had to back away from its bold ambitions.

The company tried to buy French grocer Carrefour SA three years ago, but had to abandon takeover talks, when French finance minister Bruno Le Maire said he wouldn’t let a potential $25-billion deal proceed because it would put food security at stake.

The two companies agreed to instead consider future operational partnerships