The chief executive of Alimentation Couche-Tard Inc. said the company remains committed to acquiring the Japanese operator of the 7-Eleven chain despite recent pushback.
The Quebec-based company, which operates Circle K stores, continues to believe there is "a unique strategic fit" to be realized through a merger with Seven & i Holdings, Couche-Tard CEO Alex Miller said Wednesday.
Miller's comments came after Seven & i publicized a letter last week that it sent to Couche-Tard's leadership in September explaining why it was rejecting the Canadian company's offer.
The letter by Stephen Dacus, who was chair of the Japanese company at the time and has since become chief executive, had said Couche-Tard's proposal was "not in the best interest of Seven & i shareholders and other stakeholders." The company also said it intends to boost its own corporate value and has raised antitrust concerns in the U.S.
"We are open to engaging in sincere discussions should you put forth a proposal that fully recognizes our stand-alone intrinsic value," Dacus wrote.
Speaking to analysts during a conference call to discuss Couche-Tard's third-quarter results, Miller said Wednesday that his company is undeterred.
"We have reiterated several times over the past few months that we intend to be friendly and persistent in pursuing a transaction which we believe is in the best interest of all stakeholders," he said.
"We have done that in the face of significant frustration and distraction. We look forward to fulsome engagement with Seven & i, so that we can reach definitive terms and move forward."
In October, Seven & i said it received a revised non-binding proposal from Couche-Tard that media reports suggested were valued at US$47 billion, about 22 per cent higher than an offer it made in August.
In a letter to shareholders earlier this month, a special committee convened by Seven & i confirmed both sides are working together to map out potential buyers for convenience stores that could be sold to satisfy U.S. antitrust regulators.
Miller said the two companies are determining "what a divestment would look like in the United States," noting potential buyers have signed non-disclosure agreements as part of that process.
He said Couche-Tard's management team was in Japan last week as talks continue.
"We can achieve significantly more together than each of our companies can achieve individually, including accelerating the global growth of the iconic 7-Eleven brand," Miller said.
RBC analyst Irene Nattel said Couche-Tard would likely continue courting its rival over the next eight weeks in the lead-up to Seven & i's annual general meeting scheduled for May 27.
But she said the company might potentially reassess afterward depending on the outcome of that meeting.
"Aside from the Seven & i situation, (Couche-Tard) remains engaged as it always would on potential opportunities, noting good deal flow in the U.S. across sizes and some larger opportunities in Europe," Nattel said in a note.
Couche-Tard reported Tuesday net earnings of US$645 million in its third quarter, up from US$624.4 million during the same quarter a year earlier.
For the quarter ended Feb. 2, Couche-Tard's revenues were US$20.9 billion, up 6.5 per cent from US$19.6 billion. The company said the higher revenues were mainly due to the contribution from acquisitions and higher revenue in the wholesale fuel business.
Earnings per diluted share were 68 cents US, up from 65 cents US a year earlier, which matched analysts' expectations, according to financial markets firm LSEG Data & Analytics.
Desjardins analyst Chris Li said Couche-Tard posted higher-than-expected U.S. fuel margins and better-than-expected merchandise and fuel profits in Europe for the quarter.
"We believe (Couche-Tard)’s depressed valuation largely reflects pressures on consumer spending and Seven & i deal uncertainty," Li said in a note.
Miller said consumers are still spending cautiously, but the company is seeing encouraging signs of resilience.
The results came as the company navigates potential changes in shopper behaviour amid the ongoing trade war between Canada and the U.S.
While Miller acknowledged the tariff situation remains uncertain, he said Couche-Tard is confident it won't have a major effect on its business because its stores source most products within their local countries.
"I think the larger impact is what it means for inflation and what it means for consumers that are already stretched and really struggling with disposable income. That's kind of the big unknown that we'll be watching very closely," he said.
—With files from The Associated Press
This report by The Canadian Press was first published March 19, 2025.
Companies in this story: (TSX:ATD)
Sammy Hudes, The Canadian Press
