By Adriano Marchese

Canadian convenience-store chain Alimentation Couche-Tard's year-long pursuit of 7-Eleven's Japanese parent appears to be heading toward resolution, but most signs point to a dead end, analysts say.

Couche-Tard's bid for Seven & i Holdings has progressed behind the scenes. In his latest comments on the deal Thursday, Couche-Tard Chief Executive Alex Miller said he believes the deal can clear regulatory hurdles.

But some analysts are skeptical that the deal has legs, given the overhang of Japan's national security review, persistent antitrust concerns and tepid interest from Seven & i.

TD Cowen analyst Michael Van Aelst pegs the odds of a deal between the two at one-in-three. Meanwhile, Stifel's Martin Landry doesn't think that any transaction will come to fruition and said that investors have grown restless. "Investors have symptoms of 'deal fatigue,'" he said.

And that isn't entirely a bad thing: Scrapping the potential US$47 billion acquisition, and subsequent integration of 7-Eleven, would allow Couche-Tard to focus more on its operations, and resume some shareholder friendly measures such as stock repurchases.

Miller, on the earnings call, signaled that a resolution, either way, may come to light sooner rather than later. "We've signed the NDA, we are engaged in diligence, we are engaged in management meetings, we are engaged on the divestiture," Miller said, adding that a timeline is materializing "if a transaction is going to be reached."

A Couche-Tard spokesperson declined to comment further.

Couche-Tard in August made a roughly US$39 billion bid for the Tokyo convenience-store operator, one of the largest-ever foreign bids for a Japanese company. The offer, which escalated to US$47 billion, triggered pushback from Japanese regulators, and from Seven & i, which launched its own review of potential strategic options.

Through the pursuit, Couche-Tard's stock has lagged, weighed down by the status of the acquisition. Shares are down 17% since the deal was first announced last summer, closing on Thursday at 68.90 Canadian dollars (US$50.51).

Couche-Tard will need more than backing down from the deal to boost its shares. Stifel's Landry said that the retailer must demonstrate it can improve performance of existing operations. In its latest quarter, Couche-Tard reported a 7.5% drop in revenue, short of analyst forecasts, and lower profit, as it contended with lower prices and demand for fuel, as well as consumers remaining prudent with spending on other convenience-store purchases.

Vishal Shreedhar of National Bank of Canada added that investors are watching for more than just acquisition clarity. "The key issues for Couche-Tard are that it is not delivering growth that investors have become accustomed to, and it is not repurchasing shares," he said.

Couche-Tard is also in the midst of integrating other acquisitions and completing others, such as the U.S.-based GetGo Cafe + Markets deal, which just received regulatory green light.

With everything going on, the best outcome may be no deal at all. "We believe that a resolution with Seven & i will be a positive catalyst for the shares," National Bank's Shreedhar said.

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

(END) Dow Jones Newswires

June 27, 2025 11:49 ET (15:49 GMT)

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