Circle K's proprietor renounces the acquisition of 7-Eleven's owner
Convenience Store Merger Between Alimentation Couche-Tard and Seven & i Holdings Called Off
In a surprising turn of events, Alimentation Couche-Tard (ACT) has withdrawn its acquisition offer for Seven & i Holdings, the owner of 7-Eleven, due to a lack of constructive engagement from Seven & i during the negotiation and due diligence process.
ACT accused Seven & i of obfuscation, delay, and a failure to engage in sincere discussions that would advance the proposal, despite public indications by Seven & i that they were seriously considering the offer. The withdrawal of ACT's offer sends ripples throughout the convenience-store industry and the restaurant business.
The potential merger between the two companies would have resulted in a combined entity with more locations than either McDonald's or Starbucks. However, regulatory concerns, particularly antitrust questions due to their massive, North American operations, posed significant challenges. Seven & i expressed that antitrust issues in the U.S. were a major impediment, reflecting regulatory scrutiny that could arise from combining the top convenience-store chains in the market—7-Eleven (No. 1) and Alimentation Couche-Tard (parent of Circle K, No. 2).
The decision puts an end to any prospect of a merger between the nation's two biggest convenience-store chains. ACT states that there has been "no sincere or constructive engagement" from Seven & i since the non-disclosure agreement.
Interestingly, Seven & i had pursued its own "value creation" strategy, including an initial public offering of 7-Eleven and the sale of other businesses it controls. This move might have influenced the decision-making process during the negotiations with ACT.
It's important to note that Facebook, Twitter, and LinkedIn are not involved in the withdrawal of a $46 billion offer by ACT to buy Seven & i Holdings.
7-Eleven operates Laredo Taco Company and Raise the Roost Chicken and Biscuits restaurant concepts in addition to its extensive network of convenience stores. As the largest operator of convenience stores in the U.S. by store count, Seven & i's withdrawal from the potential deal may have significant implications for the industry.
ACT initially offered to buy Seven & i for $39 billion before later upping that bid to a deal valued at around $46 billion. If the deal passes legal muster, the potential sale of some stores in certain markets may be necessary to address antitrust concerns.
ACT has accused Seven & i of a "calculated campaign of obfuscation and delay," and in a letter to the 7&i board of directors, they mentioned the negligible quantity and substance of the permitted due diligence. Despite repeated attempts, ACT said they have not been able to engage in a friendly dialogue with the Ito family, which controls Seven & i.
In conclusion, the withdrawal of ACT's offer was primarily due to a lack of engagement and obfuscation from Seven & i, coupled with anticipated regulatory/antitrust hurdles that posed risks to approving the merger between the two largest convenience retailers globally.
The unexpected withdrawal of ACT's acquisition offer for Seven & i Holdings, the owner of 7-Eleven, could have significant implications for both the restaurant industry and finance, as the combined entity would have surpassed businesses like McDonald's and Starbucks in terms of location count. Moreover, the failure of the potential merger between the two biggest convenience-store chains, 7-Eleven and Alimentation Couche-Tard, highlights the importance of constructive engagement in industry finance negotiations, especially when dealing with complex business matters.
