The acquisition proposal from Canadian convenience store giant Alimentation Couche-Tard for Seven & I Holdings (HD) seems to be the most ambitious idea from a company that has grown by accumulating acquisitions.
Couche-Tard confirmed on the 19th that they made a “non-binding friendly offer” to 7 & I HD, while explaining that it is uncertain whether an agreement will be reached. The market capitalization of 7 & I HD stood at approximately $38 billion (about ¥5.6 trillion) at the end of the Tokyo market on that day, indicating that there are multiple significant hurdles to complete such a large deal.
However, if the acquisition can be realized, it will fulfill the dream of Alain Bouchard, the co-founder of Couche-Tard, who has had a long-standing interest in 7 & I HD. According to a biography published a few years ago, Mr. Bouchard initially proposed an acquisition to 7 & I HD around 2005 but was immediately rejected.
A Canadian competitor proposes an acquisition of 7 & I HD, which could be the largest foreign acquisition of a domestic company.
A “Circle K” store at a gas station in Toronto
Photographer: Laura Proctor/Bloomberg
Mr. Bouchard aimed to acquire convenience stores and gas stations in the U.S. and Europe, targeting French retail giant Carrefour in 2021 but abandoned the effort due to political opposition in the country. Last year, he successfully acquired around 2,200 gas stations in Europe from French oil major TotalEnergies for €3.1 billion (approximately ¥502 billion at current exchange rates).
Couche-Tard’s CEO Bryan Hannasch and other executives revealed during a presentation to investors and analysts in Phoenix, Arizona last year that they were far from completing their growth strategy through acquisitions and demonstrated a broad plan targeting the U.S., Europe, Central and South America, and Southeast Asia.
The management stated in an investor document, “We are experts at completing and integrating mergers and acquisitions (M&A) around the world,” adding that “we have a balance sheet to consider very large transactions that only a few other companies can handle.”
According to Bloomberg’s aggregated data, if Couche-Tard succeeds in acquiring 7 & I HD, it would represent the largest foreign acquisition by a Canadian company in history.
According to Diana Roselopena, an analyst at Bloomberg Intelligence (BI), while 7 & I HD has a 31% market share in the Asia-Pacific region, Couche-Tard has less than 1%, indicating “a great ambition for expansion into Asia.”
Based on a figure of about 11.5 times EBITDA (earnings before interest, taxes, depreciation, and amortization), Roselopena estimates that the deal could be worth up to $86 billion. Some analysts mentioned on the 19th that while Couche-Tard can pay for the acquisition, there is a high likelihood that financing will involve a mix of bond and equity issuance.
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Alimentation Couche-Tard, which operates brands like “Circle K,” has proposed an acquisition of Seven & I Holdings (HD)
Source: Bloomberg
M&A is rooted in Couche-Tard’s DNA. Mr. Bouchard, who started with one convenience store in the suburbs of Montreal, Quebec, established a foothold in Quebec and across Canada before venturing into international expansion.
Couche-Tard now operates approximately 16,700 stores in 31 countries and regions, with about 75% of these locations added through acquisitions.
Couche-Tard’s spokesperson refrained from making comments beyond the announcement on the 19th.
Couche-Tard Lacks Asia-Pacific Exposure
Original title: Circle K Deal Machine Kicks Into High Gear With 7-Eleven Bid (1) (excerpt)
(Additional information will be updated)