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Canada’s Alimentation Couche-Tard has taken a significant step forward in its bid to buy Seven & i Holdings, after the 7-Eleven owner finally granted it access to the kinds of financial information it had been pushing for.
On Thursday, Couche-Tard, owner of the Circle K chain, said it had signed a non-disclosure agreement with the Japanese convenience store giant to “progress transaction discussions, facilitate due diligence, and collaborate on plans to engage with regulators”.
Couche-Tard has been asking publicly for such access to be granted in the months since its unsolicited offer first became public last year, dangling the possibility that more data could allow it to increase its now near-$50bn bid.
The Canadian company’s interest in buying the world’s biggest convenience store operator dates back more than two decades, but it has met resistance from Seven & i, which has repeatedly cited competition issues in the US, where a combined group would have significant market share.
The 7-Eleven owner on Thursday said the NDA included a “standstill” agreement that is often used in merger and acquisition deals to prevent a hostile offer being made while data is being shared.
“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 chief executive. “We look forward to working collaboratively with Seven & i in the interests of all stakeholders.”
Late last year, the two sides agreed to “preliminary and limited” talks between their advisers and recently signed NDAs, allowing them to hunt for potential buyers for US stores that would need to be sold off to satisfy competition authorities.
The Japanese company’s shares rose as much as 3.5 per cent in Tokyo on Thursday morning but remain significantly below the Couche-Tard offer price, reflecting investor scepticism that a deal will be reached.
Seven & i said it remained “committed to pursuing two parallel paths to ensure that value for shareholders and other stakeholders is maximised”.
The company has been trying to prove to investors it can boost its value as a standalone entity, including by selling non-core assets and planning to list and sell a minority stake in its North American business, as well as buying back more than $13bn in stock.
Seven & i has also appointed Stephen Dacus — once head of the company’s special committee responsible for evaluating the bid from Couche-Tard — as chief executive to spearhead that push.
Dacus last week told journalists in Tokyo the company was intent on increasing investment in the US, improving its supply chains and expanding its fresh food offerings.
However, he also admitted ongoing deal talks could “potentially be a 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.”
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