QUEBEC: A senior executive at Quebec’s public pension manager says the fund will likely provide financial backing to Alimentation Couche-Tard Inc if it moves ahead with a takeover bid for Seven & i Holdings Co, the parent of the 7-Eleven chain.
“Couche-Tard knows that we will always accompany them in these endeavours if necessary,” Vincent Delisle, head of liquid markets at Caisse de Depot et Placement du Quebec (CDPQ), said in an interview.
But the terms of any potential deal are still unclear, he added. “We lack so many numbers.”
Couche-Tard, the Canadian company that owns Circle K and other convenience store and petrol station brands, made an approach to Seven & i that valued it at about US$39bil.
The Japanese retailer turned it down, and said the proposal wasn’t good enough to “engage in substantive discussions”.
Couche-Tard is considering improving its offer, but publicly it has made no movement, Bloomberg News reported.
In the meantime, Seven & i has approached potential buyers for its Ito-Yokado stores and supermarkets as it seeks to restructure, according to people familiar with the matter.
CDPQ is one of Couche-Tard’s largest shareholders, and the stock is one of its most important holdings – it’s a 3.5% stake in the company, that is worth C$2.4bil (US$1.8bil).
The shares have produced a return of more than 27% annualised over the past 30 years, including dividends, and the Caisse has been along for the ride.
Delisle said he has “no idea” how much his fund would chip in to help finance a potential deal for Seven & i, but the firm has supported Couche-Tard with both equity and debt in the past.
Charles Emond, CDPQ’s chief executive officer, told Nikkei last month the fund “could participate” in a financing.
Couche-Tard repurchased about C$1.4bil of shares from CDPQ in 2023 and 2024 as part of the pension manager’s periodic portfolio rebalancing.
“That’s something that makes us even more ready to be there when companies make these big acquisitions,” Delisle said.
A Couche-Tard takeover of Seven & I would be the largest ever foreign takeover of a Japanese company, according to data compiled by Bloomberg.
Whatever the outcome, Delisle said: “It will give the global market an indication of how Japan really wants to open up and be seen as a source of investment flows or capital equal to what you’d find in Canada, the United States or Europe.”
The Caisse manages C$452bil in pension money and other assets in Quebec.
The Japanese government’s recent openness to foreign direct investment “might have impacted the timing” of Couche-Tard’s approach, according to Raymond James analyst Bobby Griffin.
“That might have pushed them to look at it a little bit harder.”
But Couche-Tard and its founder, executive chairman Alain Bouchard, have played their cards close on takeover strategy.
Bouchard has made a number of approaches to Seven & i for deals over the past two decades.
“I would be surprised if this came about very quickly,” Griffin said.
And the firm, which started with a single store in Quebec and progressed to larger and larger acquisitions, is known for looking at multiple mergers and acquisitions opportunities simultaneously, meaning it’s possible that it may emerge with a different deal for another target.
“Couche-Tard, in my experience, is a very methodical and disciplined company,” Griffin said. “They’ve walked away from more deals than they’ve closed.” — Bloomberg
