CDPQ is ready to support Couche-Tard as it considers improving its US$39bn offer for Seven & i
A senior executive at Quebec’s public pension manager, Caisse de Depot et Placement du Quebec (CDPQ), confirmed the fund may provide financial support to Alimentation Couche-Tard Inc.
According to BNN Bloomberg, this support would be in place if the company proceeds with a takeover bid for Seven & i Holdings Co., the parent company of 7-Eleven.
“Couche-Tard knows that we will always accompany them in these endeavors, if necessary,” Vincent Delisle, head of liquid markets at CDPQ, stated in an interview. However, Delisle added that the terms of any potential deal remain unclear, saying, “We lack so many numbers.”
Couche-Tard, the Canadian owner of Circle K and other convenience stores and gas station brands, initially valued Seven & i at around US$39bn in its approach. However, the Japanese retailer rejected the proposal, citing that it was insufficient to “engage in substantive discussions.”
Bloomberg News reported on Sept. 11 that Couche-Tard may improve its offer, though no public announcements have been made.
Meanwhile, Seven & i has explored potential buyers for its Ito-Yokado stores and supermarkets as part of its restructuring efforts, according to sources familiar with the matter.
CDPQ holds a 3.5 percent stake in Couche-Tard, worth $2.4bn, making it one of the company's largest shareholders. Delisle remarked on the success of the investment, noting, “Performance generated there has been tremendous.”
Couche-Tard shares have returned over 27 percent annualized, including dividends, over the past 30 years, with CDPQ benefiting from this growth.
While Delisle acknowledged uncertainty about the potential contribution from the fund to finance a deal for Seven & i, he emphasized CDPQ’s flexibility, stating, “We have all the flexibility.”
CDPQ’s CEO, Charles Emond, also indicated last month that the fund “could participate” in financing. In 2023 and 2024, Couche-Tard repurchased around $1.4bn in shares from CDPQ as part of its periodic portfolio rebalancing, making CDPQ “even more ready” for significant acquisitions, according to Delisle.
If completed, a Couche-Tard takeover of Seven & i would mark the largest foreign takeover of a Japanese company, according to Bloomberg data. Delisle suggested that the outcome of such a deal could influence perceptions of Japan’s openness to foreign investment.
“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, US or Europe.”
Analyst Bobby Griffin from Raymond James speculated that Japan’s recent openness to foreign direct investment “might have impacted the timing” of Couche-Tard’s approach, adding that “that might have pushed them to look at it a little bit harder.”
Couche-Tard’s founder and executive chair, Alain Bouchard, has made several approaches to Seven & i over the past two decades. Griffin noted that a quick resolution is unlikely, saying, “I would be surprised if this came about very quickly.”
He also highlighted that Couche-Tard has historically considered multiple acquisition opportunities simultaneously and may pursue another deal. “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.”
