es might need to divest of in order to satisfy US regulatory requirements. “We have not signed an NDA with Seven & I,” Miller said in the call. “We are working with Seven & I together around a marketing package of what a divestment would look like in the US.”   The lengthy battle  Last year, the company made a buyout offer for Seven & I. However, the 7-Eleven convenience store chain operator has declined to sign an NDA or provide due diligence access to its entire business, citing potential antitrust issues in the US.  The founding Ito family of Seven & I Holdings failed to secure financing for a US$58 billion management buyout in February, sending its shares plunging 11.7 per cent in Tokyo in the largest one-day drop in more than a decade. In response to mounting pressure, Seven & I recently appointed its first foreign CEO, Stephen Dacus, in an effort to implement organisational transformation. Dacus, who previously held executive roles at Walmart and Fast Retailing, will succeed Ryuichi Isaka on May 27. However, Seven & I investor Artisan Partners has opposed the leadership change, arguing that the company should reconsider the takeover offer instead. Other investors have privately echoed similar sentiments. Artisan Partners said it would vote against Dacus at the company’s upcoming annual general meeting, as well as against Seven & I’s vice-president Junro Ito after he failed to secure financing for the management buyout last month. Meanwhile, Couche-Tard indicated its willingness to increase its most recent US$47 billion buyout offer if Seven & I provides greater financial transparency. Bloomberg News has reported that potential buyers for US stores owned by both companies have until the end of March to express interest, with some having already signed NDAs to explore acquisitions. Couche-Tard added it plans to fund the transaction with a combination of debt and equity, stressing that it has the operational and financial flexibility to continue to invest in both the Seven & I and Couche-Tard businesses.   What Couche-Tard stands to gain Alimentation Couche-Tard, the parent company of North American convenience store chain Circle K, operates about 16,800 stores globally. Acquiring Seven & I would expand its footprint, particularly in Asia, where the Japanese firm has a dominant presence. Seven & I Holdings, formed in 2005 through the merger of Ito-Yokado, Seven-Eleven Japan, and Denny’s Japan, boasts more than 80,000 7-Eleven locations in 20 countries and regions. “The merger, if completed, would not only make Couche-Tard a leading convenience-store operator within North America but also meaningfully enhance its presence in the Asian convenience-store market,” Archana Rao, associate director at S&P Global Ratings, told Inside Retail. “Thus, the Seven & I acquisition will lead to significant scale, geographic diversity and also product diversity, particularly into the higher margin c-store versus fuel segment.” During its 2023 investor day presentation, Couche-Tard outlined its strategic growth plan, which includes the goal of achieving a twofold increase in EBITDA, to US$10 billion, by 2028. The Canadian company’s latest quarterly revenue rose 6.5 per cent, to US$20.9 billion, from a year ago. While the antitrust implications of the deal are a primary concern, public sentiment in Japan has also played a role in Seven & I’s reluctance to sell. Many Japanese consumers fear that foreign ownership could lead to a decline in the quality of 7-Eleven products, particularly fresh food offerings. However, the regulatory hurdles remain the central issue blocking the acquisition. Regulatory scrutiny and competitive impact The proposed merger between these industry-leading convenience-store operators would establish a formidable international enterprise comprising about 20,000 retail locations, representing what could become the largest foreign acquisition in Japan’s corporate history. “We expect meaningful regulatory scrutiny and regulatory approvals could take (up to two years) given both the companies’ large size and leading market share in the US,” Rao said.  “The recent termination of the proposed Albertsons-Kroger (two leading grocery retailers in the US) merger deal is an example of a tough regulatory environment in the US. We expect the process to be long and the companies will be required to divest of US assets to get regulatory approval.” The expert said that for smaller US convenience-store operators, these divestitures could present growth opportunities, allowing them to scale up in a highly fragmented industry where between 55 and 60 per cent of stores are independently owned. However, Couche-Tard’s larger scale would likely position it as a dominant competitor in the evolving retail landscape. Rao said that, similar to previous acquisitions by Couche-Tard, if this deal moves forward, both companies would realise synergies across fuel procurement and distribution value chain, food and beverage offerings, labour and store management. “We also expect [Alimentation Couche-Tard] to use its loyalty program to cross-sell and generate more revenues,” he added.   Further reading: Seven & I reveals restructure plan, new CEO