Seven & i Considering Going Private to Block Couche-Tard Acquisition

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Seven & i Holdings Co. Ltd., in a move intended to block the more than $47 billion takeover attempt by Alimentation Couche-Tard Inc. (ACT), is considering a management buyout to take itself private with funding from banks, Itochu Corp. and the founding Ito family in a transaction that could be worth approximately $58 billion, people with knowledge of the matter told Bloomberg on Tuesday.

Any deal could be presented as an option for shareholders in the event that ACT becomes more aggressive with its pursuit of Seven & i and makes a tender offer, the people said, asking not to be identified because the negotiations haven’t been made public.

Tokyo-based Seven & i is the parent of U.S. convenience-store retailer 7-Eleven Inc., Irving, Texas. Laval, Quebec-based Couche-Tard is the parent of the Circle K c-store brand.

Seven & i confirmed that it has received a non-binding and confidential proposal to acquire the company from Junro Ito, vice president and a representative director of the company, and Ito-Kogyo Co. Ltd., a private company affiliated with Ito. It did not disclose a price. Junro Ito is the second son of Seven & i founder Masatoshi Ito.

A special committee of Seven & i’s board, made up of independent, outside directors, is “reviewing the proposal carefully and thoroughly with its financial and legal advisors,” the company said in a notice to the media. “Mr. Ito has been excluded from all discussions within the company, including board discussions, relating to any proposal from Mr. Ito and Ito-Kogyo, Alimentation Couche-Tard Inc., or any other competing proposals.”

Stephen Hayes Dacus, chair of the special committee and board of directors of the company, said, “We are committed to an objective review of all alternatives before us as we consider proposals from Mr. Ito and Ito-Kogyo, from ACT as well as the company’s standalone opportunities to unlock shareholder value. The special committee and the company board will continue to engage with all parties in a manner designed to maximize value and will continue to act in the best interests of the company’s shareholders and other stakeholders.”

The notice to the media added that “no determination has been made at this time to pursue a transaction with either Mr. Ito and Ito-Kogyo, ACT or any other party, and there can be no assurance that any such transaction will be entered into or consummated. In the meantime, the company will continue to focus on executing its business plans and the actionable avenues the company sees to realize and unlock shareholder value in the near- to medium-term.”

Couche-Tard in August submitted a “friendly,” nonbinding proposal to Seven & i to acquire all outstanding shares of the 7-Eleven Inc. parent. Seven & i confirmed at the time that it had received the confidential, nonbinding and preliminary acquisition proposal, and its board formed a special committee of independent outside directors to review it. Seven & i has rejected the initial proposal twice, saying it “undervalues” the company.

Couche-Tard has since raised its offer, from $14.86 per share or approximately $39 billion, to $18.19 per share or approximately $47.2 billion. The new bid is a 22% premium over the initial bid.

In an effort to make a foreign acquisition more difficult, Seven & i also has moved to have the company designated as a national “core business” in Japan, essential to national security.

Also, Seven & i has announced a restructuring plan to spin off its noncore supermarket, food, specialty store and other businesses and to divest 444 underperforming “non-core” c-stores in North America to allow it to focus more on its convenience-store business.

• 7-Eleven is No. 1 on CSP’s 2024 Top 202 ranking of U.S. c-store chains by store count. Alimentation Couche-Tard is No. 2.

Tokyo-based Seven & i is a global operator of convenience stores, superstores, supermarkets, specialty stores, foodservices, financial services and IT services. 7–Eleven International LLC franchises or licenses more than 44,000 stores in 19 countries and regions, The brand also operates corporate or franchise stores in the United States, Canada, Mexico and Japan. Globally, the 7-Eleven trademark is represented in approximately 83,000 stores.

Irving, Texas-based 7-Eleven Inc. operates, franchises or licenses more than 83,000 convenience stores in 19 countries and regions, including more than 13,000 7-Eleven convenience stores in the United States.

Laval, Quebec-based Couche-Tard operates in 31 countries and territories, with more than 16,700 stores. Its network includes more than 7,100 stores in the United States under the Circle K and Holiday Stationstores banners, and approximately 2,100 in Canada under the Circle K and Couche-Tard banners.

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Greg Lindenberg has been covering convenience-store news and writing about the c-store and gas station industries for more than a quarter of a century. He specializes in mergers-and-acquisitions (M&A) news.

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