By Abigail Summerville and Anton Bridge
NEW YORK/TOKYO (Reuters) – Alimentation Couche-Tard will seek to address antitrust concerns of Japan’s Seven & i as the Canadian company’s management kicks off a Tokyo visit to push forward talks for its $47 billion bid for the operator of 7-Eleven convenience stores.
The Circle-K owner has been pursuing Seven & i for months even as it has received a frosty reception from the Japanese retail giant, in what would be Japan’s largest-ever foreign buyout if the deal is completed.
Couche-Tard will hold its first press conference in Tokyo on Thursday since it announced a bid for Seven & i in August as part of its efforts to win over a Japanese public sceptical of a foreign takeover of a prized national asset.
On Tuesday, Couche-Tard said it was confident there was a “clear path” to overcome U.S. regulatory hurdles in its proposed acquisition of Seven & i and expressed frustration at the 7-Eleven owner’s “limited engagement.”
Couche-Tard also said it had been working with Seven & i on a plan to divest some of their stores in the United States.
Seven & i’s newly appointed CEO Stephen Dacus, however, has reiterated that significant regulatory hurdles stand in the way of a deal. The firms are the top two players in the U.S. convenience store market, with about 20,000 locations between them.
ANTITRUST ISSUES
Couche-Tard management’s trip to Tokyo and the engagement with Seven & i on antitrust concerns underscore the lengths to which dealmakers would go to ensure deal certainty amid U.S. regulatory scrutiny.
To engage in detailed divestment discussions for antitrust purposes before a deal is agreed or any confidentiality agreement is signed is uncommon in transactions, deal advisers said.
“I can’t say I’ve seen a case where prior to a merger agreement being executed the entire divestiture package and buyer were set in stone and baked into the merger agreement,” said Kathy O’Neill, a partner at law firm Fried Frank.
But she said working on a divestiture package before a merger agreement was reached would help to potentially reduce the risk of surprise and time and effort put into chasing a deal.
Tim Cornell, a litigation partner and member of the Debevoise & Plimpton’s Antitrust Group, agreed the airing of antitrust concerns before a deal was announced was not typical.
“In certain circumstances, buyers will test the waters with regards to a divestiture package especially where they’ve identified that’s what is needed,” he said.
Couche-Tard sweetened its offer in October and has said it remained committed to the deal, after a competing $58 billion management buyout proposed by Seven & i’s founding family failed to materialise.
(Reporting by Abigail Summerville in New York and Anton Bridge in Tokyo; Writing by Kane Wu; Editing by Sumeet Chatterjee and Jamie Freed)
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