Canada's convenience store giant, Alimentation Couche-Tard, announced on Wednesday that it has withdrawn its proposal to acquire the parent company of its rival 7-Eleven, Seven & i Holdings Co., in a deal that would have significantly expanded its reach in the convenience store sector. Couche-Tard, headquartered in Laval, Quebec, has invested nearly a year trying to forge a friendly merger with the Japanese conglomerate, which boasts thousands of 7-Eleven locations alongside a diverse portfolio including supermarkets and food producers.
In its official statement, Couche-Tard cited a "persistent lack of good faith engagement" from Seven & i as the primary reason for its withdrawal. The Canadian company accused Seven & i of refusing to engage in meaningful dialogue regarding its proposal, which offered ¥2,600 (approximately C$24.04) per ordinary share in cash. Couche-Tard claimed that meetings with Seven & i's management were "tightly scripted" and fell short of addressing crucial questions about industry dynamics.
Despite Couche-Tard's assertions regarding the lack of constructive engagement, Seven & i countered that it had consistently participated in good faith discussions. In its response, Seven & i expressed disappointment but stated that it was not surprised by Couche-Tard’s decision, suggesting that the allegations made by the Canadian firm were mischaracterizations of their interactions.
The potential deal represented a major opportunity for Couche-Tard to consolidate its market position in the convenience store industry. Currently, Couche-Tard operates over 17,000 stores across 29 countries, while Seven & i’s network encompasses around 85,800 stores, employing approximately 157,177 workers and attracting 63.6 million customer visits each day. Analysts had previously warned that if the two companies merged, it could result in a new entity controlling nearly 20% of the market, significantly altering the competitive landscape.
Couche-Tard's interest in Seven & i first became public in August 2024 when it made its initial offer. However, this proposal was swiftly dismissed by Seven & i's board, citing concerns that the offer undervalued the company and was opportunistically timed. Couche-Tard submitted a revised proposal in October 2024, purportedly valuing Seven & i at US$47 billion, a nearly 22% increase from its first offer, but this too faced dismissal as Seven & i explored alternative management buyout options.
The merger talks remained fraught with challenges, particularly regarding regulatory approvals, which posed significant antitrust concerns. Seven & i highlighted these hurdles as a critical factor in its reluctance to accept Couche-Tard’s offers. Additionally, the shifting global economy, changes in exchange rates, and fluctuating financial markets complicated the potential for a deal, as acknowledged by Seven & i.
Despite these challenges, Couche-Tard made several overtures to demonstrate its commitment to the acquisition, including proposing a substantial reverse termination fee valued at approximately $1.2 billion, which could increase based on regulatory requirements. Furthermore, it suggested acquiring 100% of Seven & i's business outside of Japan, while proposing a lower ownership stake within the country. However, a counter-offer from Seven & i, which involved contributing 7-Eleven into Couche-Tard in exchange for equity ownership, was rejected by Couche-Tard as insufficient.
Ultimately, Couche-Tard concluded that Seven & i was engaging in a “calculated campaign of obfuscation and delay," leading it to withdraw its proposal entirely. This decision marks a significant shift in the dynamics of the convenience store market, with both companies now needing to reassess their strategies moving forward.
