The Japanese operator of 7-Eleven, Seven & i Holdings, confirmed on August 19 it had received a takeover bid from Canadian retail giant Alimentation Couche-Tard.RICHARD A. BROOKS/AFP/Getty Images
Alimentation Couche-Tard Inc.’s ATD-T, departing chief executive officer says he is upbeat about future takeover opportunities after the convenience store chain announced the latest financial results, though it remains largely quiet on its potential blockbuster acquisition of 7-Eleven parent Seven & i Holdings Co., Ltd. SVNDF.
Last month, Montreal-based Couche-Tard revealed it was in talks to acquire Tokyo-based Seven & i in a potential US$50-billion friendly deal, which would be the largest foreign takeover of a Japanese company. Over the past two weeks, the two companies have said nothing further on the potential transaction.
On Wednesday, Couche-Tard CEO Brian Hannasch did not refer directly to Seven & i, but did talk about the potential for consolidation in a U.S. market dominated by family-owned gas stations and corner stores. In a press release, he highlighted Couche-Tard’s US$1.6-billion purchase of 270 stores under the GetGo Café + Market brand from supermarket chain Giant Eagle Inc., which was announced last month.
“The fragmented market in the United States offers significant consolidation opportunities, and the challenging economic landscape is accelerating this trend, creating exciting growth prospects for us,” said Mr. Hannasch, who is set to retire this week, in the release.
“With our strong balance sheet and customary financial discipline, we are optimistic about future deals at the right price and fit.”
Seven & i operates the largest network of U.S. convenience stores, under the 7-Eleven and Speedway brands, along with chains in Asia and Mexico. In total, the company runs 85,800 stores, including 22,800 outlets in Japan.
Couche-Tard, which operates 16,803 stores under the Circle K and other brands in 24 countries, earned US$791-million or US$0.83 a share in the three months ended July 31, down from US$834.1-million or US$0.85 ar share in the same period a year ago. The Montreal-based retailer fell just short of analysts’ consensus estimate of a US$0.84-a-share profit.
The drop in profit reflected “softness in traffic and fuel demand as low income consumers remain impacted by challenging economic conditions,” Couche-Tard said in a release.
Revenue in the quarter rose by 17 per cent, year-over-year, to US$18.3-billion. In the past 12 months, Couche-Tard bulked up its European operations after buying gas stations from French oil giant TotalEnergies SE TTE-N. The company also runs stores in Sweden and Denmark under in the Ingo brand.
Buying Seven & i would make Couche-Tard the world’s largest convenience store chain. However, analysts predict the Canadian company would be forced to sell more than 1,000 of the two chains’ 20,000 U.S. outlets to win regulatory approval for a takeover. If Couche-Tard acquired Seven & i, it would hold approximately 13 per cent of the fragmented U.S. corner store and gas station market.
Couche-Tard is scheduled to hold its annual meeting and an analyst call on Thursday morning. It will be Mr. Hannasch’s last meeting as CEO, and Alex Miller, chief operating officer for the past two years, is set to replace him on Friday.
Mr. Miller joined the company in 2012 as an executive in its gas station business after spending 16 years at BP Plc. in the U.S. and Europe. He is just the third CEO in Couche-Tard’s 45-year history: Chair and co-founder Alain Bouchard ran the company for its first 35 years, building a global retailer through a series of acquisitions, before handing the reins to Mr. Hannasch in 2014.