By returning to the charge as it has just done with an improved offer to acquire the global chain of convenience stores 7-Eleven, Alimentation Couche-Tard seems determined to conclude a transaction which will allow it to double in size in what could become the largest acquisition ever made by a Canadian company.
Couche-Tard has once again adopted the strategy that it has used many times in the past and which has always served it well by deciding to double in size and this time multiply by five the number of its points of sale in new markets, including mainly that of Japan.
Once again, Couche-Tard’s stubbornness in wanting to complete a transaction at all costs could also be profitable for it.
Couche-Tard’s enhanced offer to acquire the Japanese chain was increased to 47 billion US dollars, up 7 billion compared to its initial offer made three weeks ago. The overbidding agreed to by Couche-Tard alone exceeds in value the largest transaction ever carried out by the group which was 4.4 billion US dollars for the purchase of CST Brands in 2016.
The largest transactions carried out by Canadian companies come far behind in terms of acquisition costs, we are thinking here of the acquisition of the telecommunications company Shaw by Rogers, in 2023, at a price of 28 billion, that of Shoppers Drug Mart by Loblaw in 2014 which concluded at a price of 12.4 billion Canadians.
The megatransaction planned by Couche-Tard could not only become the largest acquisition ever made by a Canadian company, but also the largest acquisition of a Japanese company ever made by a foreign company.
The stakes are therefore enormous and the conglomerate Seven & i, which operates the group’s 86,000 stores around the world, clearly does not intend to make life easier for Couche-Tard.
On Thursday, the Japanese group announced its intention to sell off certain assets, including supermarkets, chains of baby goods stores, etc. and to restructure its activities by now focusing on the management and operation of its network of convenience stores. in the world.
In short, the Seven & i conglomerate, whose recent financial performance has been disappointing with profitability down 25%, has decided to once again become an efficient local retail operator, as the Couche-Tard group has always been.
Big caliber
But Couche-Tard’s proposal remains a very large transaction while once again, the Montreal group wants to use its current network as leverage to finance the entire 7-Eleven operation.
An operation which could visibly be concluded at a lower cost than the 47 billion US dollars proposed by Couche-Tard if we take into account the numerous asset dispositions which could occur over the coming months on the side of Seven & i.
This is not the first time that Couche-Tard has sought to significantly magnify its size. The convenience store group has always made acquisitions of groups of equivalent size or larger than its own, which allowed it to double in volume on multiple occasions.
After unsuccessfully attempting to acquire the Silcorp group’s chain of 500 convenience stores in Ontario and the west of the country in 1996, the group fell back in 1997 on the acquisition of 295 stores from C-Corp (Province). Evening and Winks in Ontario). Suddenly, Couche-Tard tripled in size and entered the Canadian market.
To escape the takeover bid (takeover bid) launched by Couche-Tard in 1996, the Silcorp group carried out a takeover bid for the Beckers group which operated a dairy and a chain of 500 convenience stores in Ontario.
Couche-Tard waited until the transaction was finalized to orchestrate another takeover in 1999, this time friendly, at a price of 220 million to get its hands on Silcorp’s 980 convenience stores in Canada, which once again allowed it to to double in size and become the Canadian market leader.
Couche-Tard has therefore demonstrated on numerous occasions that it can be patient and even stubborn when it is convinced of the correctness of its approach and the potential of its achievement.
The public takeover offer that the company has just enhanced with a view to acquiring Seven & i is therefore part of a strategy used many times by the Quebec group.
We will now have to see if the Japanese consortium will open its game and agree to start discussions with Couche-Tard or if it will prefer to complete its approach which provides for a restructuring, the details of which will have to be presented at the next annual meeting of the shareholders of the group in May 2025.