Couche-Tard goes on charm offensive for Seven & i with Tokyo visit
[NEW YORK] Alimentation Couche-Tard will seek to address antitrust concerns of Japan’s Seven & i as the Canadian company’s management kicks off a Tokyo visit to push forward talks for its US$47 billion bid for the operator of 7-Eleven convenience stores.
The Circle-K owner has been pursuing Seven & i for months even as it has received a frosty reception from the Japanese retail giant, in what would be Japan’s largest-ever foreign buyout if the deal is completed.
Couche-Tard will hold its first press conference in Tokyo on Thursday since it announced a bid for Seven & i in August as part of its efforts to win over a Japanese public sceptical of a foreign takeover of a prized national asset.
On Tuesday, Couche-Tard said it was confident there was a “clear path” to overcome US regulatory hurdles in its proposed acquisition of Seven & i and expressed frustration at the 7-Eleven owner’s “limited engagement.”
Couche-Tard also said it had been working with Seven & i on a plan to divest some of their stores in the United States.
Seven & i’s newly appointed CEO Stephen Dacus, however, has reiterated that significant regulatory hurdles stand in the way of a deal. The firms are the top two players in the US convenience store market, with about 20,000 locations between them.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Antitrust issues
Couche-Tard management’s trip to Tokyo and the engagement with Seven & i on antitrust concerns underscore the lengths to which dealmakers would go to ensure deal certainty amid US regulatory scrutiny.
To engage in detailed divestment discussions for antitrust purposes before a deal is agreed or any confidentiality agreement is signed is uncommon in transactions, deal advisers said.
“I can’t say I’ve seen a case where prior to a merger agreement being executed the entire divestiture package and buyer were set in stone and baked into the merger agreement,” said Kathy O’Neill, a partner at law firm Fried Frank.
But she said working on a divestiture package before a merger agreement was reached would help to potentially reduce the risk of surprise and time and effort put into chasing a deal.
Tim Cornell, a litigation partner and member of the Debevoise & Plimpton’s Antitrust Group, agreed the airing of antitrust concerns before a deal was announced was not typical.
“In certain circumstances, buyers will test the waters with regards to a divestiture package especially where they’ve identified that’s what is needed,” he said.
Couche-Tard sweetened its offer in October and has said it remained committed to the deal, after a competing US$58 billion management buyout proposed by Seven & i’s founding family failed to materialise. REUTERS
Share with us your feedback on BT's products and services
