Alimentation Couche-Tard has withdrawn its offer to acquire 7-Eleven’s parent for approximately US$46-billion.

In a strongly worded letter to the Seven & i board, Couche-Tard Founder and Executive Chairman Alain Bouchard, along with President and CEO Alex Miller, cited a lack of sincere engagement from the Japanese company and accused it of deliberately stalling negotiations.

“There has been no sincere or constructive engagement from [Seven & i] that would facilitate the advancement of any proposal, contrary to comments made by [Seven & i] representatives” as recently as this month. “Rather, you have engaged in a calculated campaign of obfuscation and delay, to the great detriment of [Seven & i] and its shareholders.

“We believe this approach reinforces our concerns about your approach to governance.”

Laval, Que.-based Couche-Tard, which owns the Circle K banner and other brands, had pursued the acquisition for nearly a year, seeking to combine two of the world’s largest convenience-store operators.

Couche-Tard signed a non-disclosure agreement with Seven & i in April and held high-level meetings in both Dallas and Tokyo. But Couche-Tard said that, despite these steps, the Japanese retailer never demonstrated genuine willingness to explore a deal.

“As we have expressed many times, we do believe that fully combining our two companies is the most straightforward and effective way to maximize value to all stakeholders,” Bouchard and Miller wrote. “We believe this combination has the ability to enhance that path. However, we are not able to effectively pursue this combination without deeper and genuine further engagement from 7&i leadership and the special committee.”

The Canadian company also revealed that it had proposed alternatives to a full takeover, including acquiring only Seven & i’s international business outside of Japan or taking a 40% minority stake in the Japanese operations.

Seven & i countered with a proposal to sell its international business in exchange for equity in Couche-Tard — a suggestion the Canadian firm rejected, saying that it would “undermine the operational prospects of the combined business.”

Seven & i responded publicly, stating that Couche-Tard had “unilaterally decided to end discussions. The Tokyo-based firm denied any misconduct while expressing disappointment with the withdrawl.

Seven & i said it also disagreed with Couche-Tard’s “numerous mischaracterizations,” while citing changes in global economic conditions, exchange rates and financing markets we are not surprised,” the company said in a statement. It cited changes in global economic conditions, exchange rates, and financing markets since the initial proposal was made.

In addition, Seven & i said a board special committee had engaged in good faith and constructively during the negotiations.

Seven & i also highlighted “extraordinary” U.S. anti-trust legal hurdles, renewing an often stated concern. The company has continuously questioned whether the proposed transaction could receive U.S. regulatory approval. But Couche-Tard has repeated stated, as Bouchard and Miller did in their letter, that the company has proposed would meet American compliance requirements.

The proposed merger would have brought together the two dominant convenience-store chains in the U.S. at a time of growing competition from broader retail rivals and shifting consumer habits, The Globe and Mail reported. Despite its size, the sector remains fragmented in the U.S., with the top 10 players accounting for just 19% of all stores, according to the Globe.

Seven & i has also repeatedly expressed doubt that Couche-Tard could obtain sufficient financing to complete the proposed agreement. But the Caisse de Dépôt et Placement du Québec indicated months ago that it would provide Couche-Tard with a large amount of capital to help complete the proposed merger. And, according to the Globe, Couche-Tard had obtained sufficient financing when face-to-face negotiations began.

Goldman Sachs, the Royal Bank of Canada and the Bank of Nova Scotia signed letters stating that they were “highly confident” Couche-Tard would secure sufficient financing, the Globe reported.

Couche-Tard will now begin to seek other acquisition targets, according to the Globe.

Pictured: Seven & i convenience store in Japan.

Photo: Shutterstock