- Couche-Tard has made a takeover bid for Japanese giant Seven & i Holdings.
- The Canarians are considering various options for financing the transaction, while the Japanese are thinking about how to make the takeover more difficult.
According to Retail Insider, talks are underway with the Canada Pension Plan Investment Board and the Ontario Teachers' Pension Plan, among others. The retailer is exploring the possibility of raising several billion dollars from potential co-investors to bolster its takeover bid for the Japanese retail giant.
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They want to take over a convenience store giant. An offer is on the table 
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Couche-Tard seeks financing options for 7-Eleven acquisition
If successful, the proposed acquisition of Seven & i Holdings would be the largest-ever foreign takeover by a Japanese company, with Seven & i Holdings, which has 85,000 stores worldwide, now valued at about $38 billion.
Couche-Tard, which already operates a chain of about 16,700 stores and has a market value of about $56 billion, is considering a range of financing options for the venture. Options include traditional debt financing as well as the possibility of issuing new shares.
7-Eleven to fall into Canadian hands? Japanese want to resist (photo: Shutterstock)
Cash-rich major pension funds and sovereign wealth investors are becoming increasingly active in financing large-scale deals, a strategy that allows firms like Couche-Tard to leverage large pools of capital while providing institutional investors with opportunities for significant returns.
The combination of two powerhouses could change retail
Couche-Tard’s potential acquisition of Seven & i Holdings could have far-reaching implications for the global convenience store industry. It would combine two retail powerhouses, potentially creating a dominant force in the industry with an unprecedented global reach. For Canadian consumers, it could mean access to a wider range of products and services, as well as innovations in the store experience.
The talks are still in the early stages. Couche-Tard has submitted a non-binding proposal and there are likely to be regulatory and financial hurdles to overcome before any deal can be finalized. The involvement of Canadian pension funds, if secured, could also be a vote of confidence in the strategic vision for a potential takeover.
7-Eleven not wanting to sell?
The bigger problem, however, may not be the issue of financing, but the Japanese reluctance to sell the business.
According to the Financial Times, the holding company would like to use the tactic of trying to convince the Japanese government to change the 7-Eleven designation in its group from "non-core" to the more government-protected "core" variant. The change would be important in terms of Japan's Foreign Exchange and Trade Act (Fefta). Under the current status, the acquisition of Seven & i would require government approval only after the details of the transaction have been agreed. However, if it succeeds in convincing decision-makers to change the status of the holding company's portfolio company, the foreign buyer would have to be vetted by the Ministry of Finance.
Japanese M&A lawyers say the effort to obtain core status will be difficult and could end in failure. The holding company would first have to convince the government that convenience stores are “critical infrastructure in the event of a natural disaster,” and then demonstrate that such a role would be jeopardized by an investor’s takeover.
