Alimentation Couche-Tard Inc.'s decision to step away from a proposal to buy the Japanese parent company of 7-Eleven was being chalked up as a "missed opportunity" a day after it announced its pullback.
Shares in the Laval, Que.-based company closed up eight per cent at $74 on Thursday as the market digested the news that there would be no deal between Seven & i Holdings Co. Ltd. and Couche-Tard, which accused its takeover target of "lack of constructive engagement."
"I understand why they had to do this, but it's disappointing that the other side wouldn't engage constructively, strategically and long term," said Brian Madden, chief investment officer at First Avenue Investment Counsel Inc., which owns Couche-Tard shares.
Couche-Tard's Wednesday announcement scuttled the bid after more than a year of courtship in hopes of landing a friendly deal with the Japanese company.
A transaction would have made Couche-Tard the dominant player in the global convenience store market, increasing its footprint significantly and giving it deep in-roads to the Asian market.
After plenty of back and forth, it dropped its proposal, complaining that both Seven & i's founding family and its management team were not receptive to Couche-Tard's repeated attempts to find a path forward.
"We are not able to effectively pursue this combination without deeper and genuine further engagement from 7&i leadership and the special committee," Couche-Tard executives said in a letter to Seven & i.
For its part, Seven & i Holdings Co. Ltd. says it engaged in good faith and constructively with the Canadian company to explore the possibility of reaching a deal.
"At the same time, we were always honest about the extraordinary antitrust hurdles a potential transaction would face, including the protracted timeframe to move through the regulatory process," Seven & i said in a statement.
Madden thought the transaction would have been "a gem of a deal" but the way things unfolded meant the only other option for Couche-Tard was taking a hostile route.
"I'm not surprised they chose to walk away," he said. "This would have been a very high-risk deal to try and execute in hostile fashion in a country where the corporate governance regime is not shareholder friendly."
Martin Landry, managing director at investment bank Stifel, was also unsurprised by Couche-Tard's decision.
"Couche-Tard faced challenges since the beginning of this process when its offer got leaked, forcing the company to disclose publicly its intentions but with limited details on rationale, strategy, synergies, financing and accretion," Landry wrote in a report.
"Hence, from the get-go investors have been hesitant regarding this potential acquisition, standing on the sideline waiting to get more details."
He predicted Couche-Tard will resume its share buyback plans. They would be well received by investors and could bring some momentum to the company's stock price, Landry said.
He also suspected the company would keep up with its acquisition pipeline. Couche-Tard has closed on 75 deals over the last 20 years.
There were, however, a few that got away.
The company tried to buy fuel retailer Caltex Australia Ltd. for US$5.8 billion but walked away when the COVID-19 pandemic began.
It went after French grocer Carrefour SA in 2021 but abandoned that prospect when French finance minister Bruno Le Maire said he wouldn't let a potential $25-billion deal proceed because it would put food security at stake.
Madden doesn't think the failure to find success with Seven & i is proof that Couche-Tard can't get deals done.
"They earned the right to pursue 7-Eleven," he said, noting Couche-Tard has been a strong operator of convenience stores, while Seven & i has faced activist investors, reduced shareholder value and now, a botched deal.
While he said there are no other possible acquisitions that could rival 7-Eleven, he doesn't expect Couche-Tard to be "permanently scarred by this experience and forego trying to take down other chains that might be a couple of thousand stores here and there."
He said it's possible Couche-Tard will densify its western European footprint or expand the toehold it has in Asia, where Circle K has a presence in the Philippines and Malaysia.
"That could be another possible avenue, but I don't think they're going to feel gun-to-the-head compelled to do that immediately in the wake of this experience," he said. "But I think they'll keep blocking and tackling and buying."
This report by The Canadian Press was first published July 17, 2025.
Companies in this story: (TSX:ATD)
Tara Deschamps, The Canadian Press
