Alimentation Couche-Tard has met privately with key Seven & I Holdings shareholders as the Canadian firm ramps up pressure on the operator of 7-Eleven convenience stores to engage in takeover talks.

Along with public overtures, Couche-Tard founder and Chairman Alain Bouchard met privately with some Seven & I shareholders in Tokyo last week to make the case for why they should agree to the takeover, according to people familiar with the matter, who asked not to be identified because details of the meetings aren’t public.

While he didn’t explicitly urge stakeholders to pressure Seven & I, he outlined the benefits of the deal and discussed the attractiveness of the business, particularly 7-Eleven’s presence in Japan, and its potential for growth, said one of the people.

Bouchard led last week’s publicity blitz as the Canadian owner of Circle K stores sought to reassure the public and key stakeholders that it wasn’t considering a hostile takeover, despite a monthslong standoff with Seven & I. He also raised the possibility of an even more attractive offer, saying he was willing to increase his buyout bid should the Japanese firm provide access to financial information in order to conduct due diligence.

A representative for Couche-Tard declined to comment. A spokesperson for Seven & I said the company won’t comment on individual shareholders but is in direct dialog with institutional investors and continues its engagement with Couche-Tard.

Investor pressure

The surprise $49 billion takeover proposal from Couche-Tard came to light in August. So far, Seven & I has rebuffed the approach, citing uncertainties over clearing U.S. antitrust hurdles. But the collapse of a management buyout plan aimed at fending off Couche-Tard has left Seven & I facing increasing pressure to engage more deeply in talks and resolve the stalemate swiftly.

Seven & I’s appointment of new CEO Stephen Dacus — part of an overhaul that also includes the sale of its supermarkets and retail business for $5.4 billion and a planned ¥2 trillion ($13 billion) share buyback — is adding impetus to the push, according to shareholders.

"These things should not be rushed, but if we’re still trying to decide whether to merge with Couche-Tard in a year, something’s wrong,” said Carl Vine, co-head of Asia-Pacific equities at M&G Investments, which owns about 0.6% of Seven & I, data shows. "It’s not helpful for a business to be distracted for an excessively long time with ownership issues,” he said.

The asset manager didn’t attend the private shareholders’ meeting with Bouchard.

U.S.-based asset manager Artisan Partners, which holds stakes of roughly 1% in both Seven & I and Couche-Tard, has been the most public voice pushing for the proposal to be considered. Last week, it urged investors to express their dissatisfaction with the convenience operator’s leadership and called Dacus’ role as the head of the special committee evaluating Couche-Tard’s bid a conflict of interest.

The retail giant has failed to "pursue the path that offers the best future for the company and maximizes value,” Artisan said in a letter to investors. It’s not clear whether the investor met with Bouchard.

Seven & I has said it is engaging with Couche-Tard, but a core concern is that U.S. competition authorities won’t give the deal the green light given the overlap in the companies’ businesses — 7-Eleven and Circle K are the two biggest convenience-store networks in the country. In response, Couche-Tard has agreed to seek a buyer for some of its stores in advance of any potential deal.

The Japanese company has been right to be cautious about disclosing financial data to its biggest competitor in the United States, and it would make sense for deeper discussions to take place once regulatory concerns are addressed, said Vine, who oversees M&G’s Japan equities strategy.

Still, one thing working in favor of a deal is a compatible corporate culture — often a critical component of making mergers and acquisitions successful, he said.

Growth plan

The outcome doesn’t need to be an outright takeover, according to shareholders.

Value can be realized as a standalone company or through some form of combination with Couche-Tard, according to M&G’s Vine.

Seven & I can seek profit growth by forming a capital and business alliance with Couche-Tard, said Tetsuro Ii, CEO of Commons Asset Management, which owns about 0.04% of the Japanese firm. The asset manager didn’t attend the private shareholders’ meeting with Bouchard.

But the consensus is that Seven & I is worth more than its current ¥5.6 trillion market value — about 20% below Couche-Tard’s proposed price. The Japanese firm’s shares have dropped about 13% this year.

And missing from the protracted deadlock has been a clear strategy for ensuring Seven & I’s growth going forward.

"Neither Seven nor Couche-Tard have presented a mid- to long-term growth strategy that investors can accept,” said Commons Asset’s Ii. "There is little information to base an investment decision on, making it difficult. I would like them to focus more on business growth.”