As talks between 7-Eleven owner Seven & i Holdings (7&i) and Circle K owner Alimentation Couche-Tard (ACT) ramp up, both companies are searching for ways to optimize the deal, while avoiding U.S. antitrust complications.
Today, 7&i issued a statement to its shareholders outlining potential paths forward for the two companies, while re-emphasizing its previously-announced divestiture plan.
“As is well known, a combination of 7&i and ACT would face significant antitrust hurdles. A consistent threshold issue that we have raised from the outset has been how to put together a divestiture package involving an unprecedented number of 2,000 or more overlapping stores that could be divested to a viable, credible and independent buyer in a manner that could be stood up to operate effectively on a go-forward basis and assure competition between the buyer and ACT post its acquisition of 7&i,” the statement read.
Now, however, the companies are looking to sell some stores before a potential takeover in an attempt to calm some of the antitrust waters.
“There is no certainty that a divestiture package can be stood up as an independent company or that a suitable divestiture buyer can be identified that can operate it independently — both key factors that would be considered by regulatory authorities and courts. The cautionary tale of the Albertsons-Kroger transaction clearly demonstrates the risks of consumer-facing retailers looking to divest thousands of stores without a buyer that is market-tested and well positioned to preserve the competitive landscape,” the statement continued. “As responsible stewards of our shareholders’ capital, we will not blindly enter a transaction with no clear path to closing that could leave our company in a value destructive limbo for multiple years.”
The Japanese company laid out three potential paths forward:
- ACT could divest all U.S. Circle K stores, taking U.S. antitrust “off the table.”
- ACT could execute a definitive divestiture agreement with a buyer of the 2,000 or more divestiture stores as a condition of the merger agreement between 7&i and ACT.
- The companies could work together to map out a divestiture process by defining operational, management and financial characteristics of the stores, as well as potential buyers.
Couche-Tard has already agreed to explore the third option, 7&i wrote, and “joint outreach by financial advisors to ACT and 7&i to potential buyers has begun.”
This is one of the most definitive marks of progress that we have seen since Couche-Tard lofted the friendly proposal to acquire 7&i for $48 billion in August 2024.
“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.”
