Couche-Tard, owner of Circle K, has entered into a non-disclosure agreement (NDA) with Seven & i to “progress transaction discussions, facilitate due diligence, and collaborate on plans to engage with regulators”.
Couche-Tard has publicly asked for this access since its unsolicited bid last year, saying enhanced visibility into Seven & i’s financials could justify an increased offer, approaching $50bn.
Privately, both parties have attributed delays in progress to the other’s lack of cooperation.
Seven & i confirmed today that the NDA includes a “standstill” clause, a standard provision in mergers and acquisitions that prevents a hostile bid while confidential data is being exchanged.
“We appreciate the special committee of Seven & i engaging in substantive discussions regarding our proposal and providing access to diligence,” said Alex Miller, Couche-Tard’s CEO. “We look forward to working collaboratively with Seven & i in the interests of all stakeholders.”
In late 2024, preliminary and limited discussions via respective advisors started and they signed NDAs (allows a search for potential buyers of US stores likely to be divested to address regulatory concerns if a deal went ahead).
Seven & i shares were up 3.5% in Tokyo today, but well below the offer price (investor scepticism).
Seven & i are “pursuing two parallel paths” to maximise value for shareholders and stakeholders, also also striving to enhance its standalone valuation by divesting non-core assets, planning a partial listing of its North American operations, and executing a share repurchase programme exceeding $13bn.
They recently appointed Stephen Dacus as Chief Executive Officer, who was previously the chair of their special committee evaluating Couche-Tard’s proposal.
In Tokyo last week, Dacus affirmed their focus on increasing US investments, strengthening supply chains, and expanding its fresh food offerings, but the ongoing acquisition talks could be a potential distraction.
“At some point, you’ve got to make a decision, one way or another,” he said. “There’s still a lot of hurdles to clear … I suspect it’s going to take a while still, because there’s still some really serious things that need to be worked out.”
NamNews Implications:
- In agreeing to an exchange of confidential financial information…
- …it could be said that both parties are taking the possibility of a takeover seriously.
- (Albeit within the protection of a ‘standstill’ position and NDA agreement)
- Therefore, if the price is right, all will proceed…
- Meanwhile, suppliers and retail rivals will benefit by treating this as a done deal…
- …and exploring options and acting accordingly.
- (unless they prefer to risk awaiting the inevitable…)
