Our Approach to Regulatory Approval

We continue to believe that there is a clear path to regulatory approval in the U.S. The U.S. convenience store industry is highly fragmented, with over 150,000 stores nationally. Both Couche-Tard's and Seven & i's stores operate in the U.S. in competition with a wide array of brick and mortar and online food and merchandise providers. Additionally, Seven & i and Couche-Tard largely operate in complementary geographies across the U.S.

The joint work we are undertaking in collaboration with Seven & i and its external counsel with respect to outlining the divestiture portfolio and assessing potential buyer interest has confirmed this view. We believe there is a path to divesting a portfolio of stores that will be a viable, strong competitor in the U.S. convenience space, satisfying antitrust requirements, and we look forward to further engaging with the FTC and other agencies at the appropriate time.

Firm Commitment to Number of Divested Stores

In the term sheet provided to Seven & i at the end of December 2024, we included a commitment to divest over 2,000 stores in the U.S. in order to obtain approvals to close a transaction.

Couche-Tard also offered to commit to litigate any outcomes of regulatory reviews should that become necessary.

Reverse Termination Fee

The term sheet also put forth a compelling reverse termination fee intended to both provide incentive for Couche-Tard to make extraordinary efforts to obtain regulatory approvals, and to also compensate Seven & i shareholders in what we believe is the unlikely event approvals are not achieved.

Acceleration of Divestiture Process

Teams from Couche-Tard and Seven & i, alongside our external counsels and financial advisors, have been working for several months to identify the U.S. divestiture perimeter and to advance thinking on carving out and standing up a divested entity to ensure its success as a strong competitor.  

Following this, in a joint process, we have solicited interest in the divestiture from a group of highly credible buyers. This process of identifying the divestiture perimeter and potential partner positions us well to engage in detailed discussions with the FTC as soon as we have an agreed transaction for the combination of Couche-Tard and Seven & i, and positions us well to deliver the transaction close on the fastest timeline possible.

We have received multiple indicative proposals from highly experienced and credible buyers. We will remain flexible in our approach to the divestiture process to ensure that any potential antitrust concerns are addressed, but we believe the actionable, strong and broad level of interest so far clearly demonstrates that we have several clear paths to consummate the required divestitures and complete the transaction.

Differences with Kroger/Albertson Approach

We would note that in several public communications, Seven & i and various of its representatives have drawn parallels between the potential divestiture remedy in this transaction and the Kroger/Albertson’s merger. We disagree with this comparison.

In examining the opinion of the District Court and the statements made by the FTC with respect to that matter, there are clear distinctions that should be drawn between the two scenarios that we believe make the respective potential remedies fundamentally different, and speak to the viability of the potential remedy in this transaction:

  1. The convenience store industry in the U.S. is highly fragmented and competitive. The combination of Couche-Tard and Seven & i results in a business with less than 13% of U.S. convenience stores.
  2. The sites included in the perimeter we selected are based on a clear formula with no reference to site performance or quality, and the scope is intended to be inclusive of all geographies where there are potential concerns of reduced competition. We look forward to working collaboratively with the FTC to review this methodology and scope.
  1. The divestiture will result in a significant convenience store operator with a scaled and cohesive footprint, and exposure to attractive geographies.
  2. Couche-Tard will commit to appropriately standing up the business to ensure it is a strong and viable competitor. Importantly, this will include putting in place highly experienced management and operational teams, appropriate IT systems and infrastructure, and relevant distribution and sourcing capabilities.
  3. We, with the collaboration and cooperation of Seven & i, have jointly undertaken outreach to parties to seek credible buyers prior to announcing a broader transaction.