The owner of the Circle K convenience store chain submitted an unsolicited offer for 7-Eleven’s parent company, a combination that would control an estimated 20% of the U.S. convenience store market.
Alimentation Couche-Tard, owner of Circle K, submitted a “friendly, non-binding proposal” for Seven & I Holdings, owner of 7-Eleven, according to the Canadian company. Seven & I confirmed it received the bid and said the offer values the company at about $38.5 billion. 7-Eleven had 12,601 stores in the U.S. and Alimentation Couche-Tard had 5,845 as of March, according to the National Association of Convenience Stores.
Alimentation Couche-Tard “is focused on reaching a mutually agreeable transaction that benefits both companies’ customers, employees, franchisees and shareholders,” the company, based in the Montreal suburb of Laval, Quebec, said in the statement. “There can be no certainty at this stage that any agreement or transaction will be reached.”
Seven & I said it formed a special committee of independent directors to evaluate the proposal.
“The special committee intends to conduct a prompt, careful and comprehensive review of the proposal, the company’s stand-alone plans and other alternatives for enhancing corporate value,” Tokyo-based Seven & I said in its statement. 7-Eleven’s U.S. headquarters is in Irving, Texas.
7-Eleven is the largest U.S. convenience store chain with about 14.5% of the market last year, Neil Saunders, managing director of GlobalData, said in an email. Alimentation’s stores, including Circle K and other brands, hold about 4.6% of the market, he said, giving a combined entity almost 20%.
Growth Through Acquisitions
Convenience stores in the United States have been in rapid expansion mode with chains such as Wawa, Casey’s General Stores and Buc-ee's all adding stores and moving into new states. Some companies have made acquisitions to expand, too, including Alimentation Couche-Tard and Maverik, the recent buyer of the Kum & Go chain in the Midwest.
The potential tie-up of Circle K and 7-Eleven also comes a week after candy and pet food maker Mars agreed to buy snack food maker Kellanova for $36 billion.
In a separate statement Monday, Alimentation Couche-Tard said it agreed to buy GetGo, the convenience store division of supermarket Giant Eagle. GetGo operates about 270 stores in Pennsylvania, Ohio, West Virginia, Maryland and Indiana.
The sale is expected to close next year, pending regulatory approval.
GetGo operates both traditional stores and stand-alone kiosks and sells made-to-order food at most locations.
In a separate transaction involving banking on food, BP last year acquired TravelCenters of America for $1.3 billion.
TravelCenters' portfolio includes more than 600 full-service and quick-service restaurants with about 70% of its total gross margin being generated by the convenience store business.