Couche-Tard raised its offer to about US$47 billion last year and in March offered to increase it further if the Japanese firm cooperated and revealed more financial information.
It was also working with Seven & i on a store sale plan, in a bid to ease some regulatory hurdles.
Couche-Tard’s approach appeared to be gathering steam after a white-knight bid from Seven & i’s founding Ito family ended after failing to get financing.
Couche-Tard said it had sought to speak to the family but found them unwilling to engage.
The two companies inked a non-disclosure agreement (NDA) but “the quantity and substance of the permitted due diligence, including at two tightly constrained management meetings, have been negligible”, Couche-Tard said in the letter.
ALTERNATIVE PROPOSALS
Couche-Tard said it believed a full combination of the two companies would maximise value for shareholders, but had also explored alternatives.
The retailer said it had proposed acquiring all of Seven & i’s business outside of Japan and 40 per cent of the business in Japan, where convenience stores are seen as key infrastructure due to their support role during natural disasters.
“We are not able to effectively pursue this combination without deeper and genuine further engagement from Seven & i leadership and the special committee,” the letter said.
Seven & i proposed selling its international business to Couche-Tard in return for a stake in the Canadian retailer, the letter said.
Such a deal “would not deliver the significant premium that was offered to your shareholders in our transaction proposals”, the letter said.
Seven & i, whose first foreign CEO Stephen Dacus took the role in May, has been under intense pressure to improve its lacklustre earnings and demonstrate it can grow independently.
“We remain fully committed to our standalone value creation plan, which we have been pursing in parallel,” said Seven & i.
The retailer has announced a share buyback, is selling off non-core assets and plans to list its North American convenience store business.
“It shows you can drag out the process to avoid being bought out,” said an investor in Seven & i, who spoke on condition of anonymity.
Given how long Couche-Tard’s process has taken, I can’t see anyone else coming in with a bid,” the investor added.
