7&i, Couche-Tard Discuss Store Sell-Off
The dance between 7 & i Holdings and Alimentation-Couche Tard (ACT) continues as the two major convenience store operators have agreed to identify a group of stores that could be sold along with compiling a list of potential buyers of those locations.
While the two swapped publicly-shared letters about ACT’s bid to acquire 7&i, they have agreed to map out the viability of a store divestiture process by defining operational, management, and financial characteristics of the group of stores that could be sold.
“We are pleased that ACT has recently agreed to explore the third option we proposed above, and joint outreach by financial advisors to ACT and 7&i to potential buyers has begun,” 7&i officials said in a statement. “We and our advisors believe we can now make progress towards determining whether a credible and actionable remedy and divestiture package can be achieved that would allow a realistic assessment of ACT's proposal under the areas we noted above – value and certainty of closing.”
This meeting of the minds, at least on this issue, follows months of back-and-forth between the convenience store giants over 7&i’s antitrust concerns. Citing the recent rejection of the proposed Kroger/Albertsons merger, 7&i feels any deal between it and ACT would face “significant antitrust hurdles.”
At it relates to store divestitures, 7&i have proposed:
• ACT could divest all the stores including Circle K stores in the U.S. in a "clean sweep," taking U.S. antitrust risk off the table.
• ACT could execute a definitive divestiture agreement with a buyer of the 2,000 or more divestiture stores as a condition precedent to the signing of a definitive merger agreement between 7&i and ACT.
Despite the recent agreement for the entities to review which store locations could be sold, ACT officials said they continue to be disappointed that engagement has been very limited and focused only on the path to U.S. regulatory approval.
“Couche-Tard has a successful track record of working with U.S. and other regulators, in full compliance with applicable processes and requirements, to secure approvals of transactions,” the company said in a statement. “We firmly believe there is a clear path to regulatory approval in the U.S.”
The statement continued, “The U.S. convenience store market is highly fragmented, with over 150,000 stores nationally. Both Couche-Tard's and 7&i's stores operate in the U.S. in competition with a wide array of brick and mortar and online food and merchandise providers. Additionally, 7&i and Couche-Tard largely operate in complementary markets across the U.S.”
ACT said the company in late December provided a “detailed proposal” with 7&i that included a specific number of stores the company would be willing to divest and a large reverse termination fee, structured to ensure Couche-Tard would be “highly motivated” to take additional actions as may be necessary in order to complete the transaction.
Seven & i subsidiary 7-Eleven Inc. operates, franchises and/or licenses more than 13,000 stores in the United States and Canada. In addition to 7-Eleven stores, it operates and franchises Speedway, Stripes, Laredo Taco Co., and Raise the Roost Chicken and Biscuits locations.
Alimentation Couche-Tard operates in 31 countries and territories, with more than 16,800 stores, of which approximately 13,000 offer road transportation fuel. With its Couche-Tard and Circle K banners, the company is one of the largest independent convenience store operators in the United States and also has convenience store and road transportation fuel retail in Canada, Scandinavia, the Baltics, Belgium, and Ireland.
