By Adriano Marchese

Japan's Seven & i said that Alimentation Couche-Tard has underestimated antitrust hurdles facing their proposed $47 billion deal and hasn't made concessions to protect shareholders should the deal fall apart.

The operator of the 7-Eleven convenience store chain said that Canada's Couche-Tard hasn't gone far enough in addressing the regulatory risks tied to their proposed deal, particularly in the U.S. where the Federal Trade Commission has taken a harder stance on larger mergers.

"We have been insistent on ensuring a clear path to antitrust regulatory approval as a first step for one reason: a deal that doesn't close is not a deal, and it will destroy shareholder value," Seven & i said in company documents posted online Tuesday.

"The board will not blindly enter into a transaction with no clear path to closing that could leave the company in a value destructive limbo for multiple years," the company added.

A Couche-Tard spokesperson declined to comment on the latest statement. Last week, Couche-Tard Chief Executive Alex Miller said during an earnings call that "our focus remains on a friendly approach on engaging with Seven & i, highlighting the benefits that we see to both groups of shareholders and all stakeholders."

To illustrate the risks, Seven & i cited the example of Kroger and Albertsons, two of the largest grocers in the U.S., who have been entwined in a legal battle after their own failed merger. It said that grocery deal had a similar competitive landscape and size profile to a potential deal between it and Couche-Tard.

Seven & i noted that the proposed deal with Couche-Tard has already faced early scrutiny. After Couche-Tard's offer was reported in August 2024, Seven & i said it received an unsolicited notice from the U.S. regulator suggesting that it would begin an investigation, even before a deal was agreed.

Seven & i said that despite acknowledging the likelihood of divestitures, Couche-Tard hasn't offered to fully assume the risk of potential regulatory road blocks, leaving its own shareholders at risk of holding the bag if the transaction fails. Couche-Tard has said the company believes there is a clear path to obtaining regulatory approvals.

Couche-Tard "is understating the risk here," Seven & i said. "Resolving antitrust matters is not nearly as simple as selling a few stores -- the divestiture package required for this transaction to even have a chance would be unprecedented in size, complexity and scale."

One of the possible solutions is divestiture. Recently, the two companies have asked their financial advisers to search for potential buyers for some stores to mitigate any U.S. antitrust risk before signing a takeover agreement.

In Couche-Tard's earnings call, Miller also confirmed that the company is currently working with Seven & i on a marketing package on what a divestment package would look like.

Seven & i in September rejected an initial $39 billion buyout bid from the Circle K owner, saying the proposal underestimated the company's value. Couche-Tard later raised its offer to about $47 billion and in January submitted a revised, yen-denominated proposal at Seven & i's request.

Seven & i is pursuing parallel options as it weighs its choices between a potential sale to Couche-Tard or pushing for a standalone strategy for its U.S. operations. Earlier in March, Seven & i said it would split its North American convenience stores into a separate listed company by the second half of next year. The 7-Eleven parent also named its first American chief executive, former Walmart executive Stephen Hayes Dacus.

Write to Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

March 25, 2025 12:34 ET (16:34 GMT)

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