$ATD (-2.26%) Alimentation Couche-Tard says several potential buyers have made proposals to acquire its convenience stores in the U.S. that overlap with Seven & I Holdings, showing progress on a deal that could help the Canadian retailer win regulatory approval for its proposal to buy its Japanese rival.
The two agreed earlier this year to discuss the possible divestiture of more than 2,000 stores in the U.S. and seek interested parties to address concerns from Seven & I about a merger blocked by the U.S. Federal Trade Commission. Couche-Tard also resisted any parallels to a failed $24.6 billion merger of grocery chains Kroger and Albertsons.
Seven & I, which operates the 7-Eleven, Speedway and Sunoco stores, has balked at Couche-Tard's unsolicited 7.39 trillion yen ($51.3 billion) takeover offer and is overhauling its business under new Chief Executive Officer Stephen Dacus to increase its value. Despite the resistance, Couche-Tard, the parent company of Circle K, has pushed ahead with the talks by entering into a non-disclosure agreement two months ago to gain access to financial information and potentially increase its bid.
"We have received several indicative proposals from very experienced and credible buyers," Couche-Tard said on a website it set up to explain its proposal to buy Seven&I. "We believe the actionable, strong and broad interest to date clearly demonstrates that we have several clear paths to complete the required divestitures and finalize the transaction."
Several private equity firms have shown strong interest in buying the assets, Filipe Da Silva, Couche-Tard's chief financial officer, said in March.
Couche-Tard also addressed some concerns about a potential merger by highlighting the differences between its proposal and the moribund Kroger-Albertsons combination. The FTC blocked the deal last year on antitrust grounds, saying the divestiture plan was inadequate; Seven & I cited that as a high risk factor for approving a deal with Couche-Tard.
"The convenience store industry in the U.S. is highly fragmented and competitive," Couche-Tard said. "The combination of Couche-Tard and Seven & i results in a deal with less than 13% of U.S. convenience stores."
The Canadian retailer also reiterated that it has "a mandatory reverse termination fee" in case a transaction is not completed.
SOURCE: https://www.japantimes.co.jp