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The top US competition regulator has told lawyers for the parent companies of Circle K and 7-Eleven to retain documents linked with a potential $39bn merger of their petrol station and convenience store chains, an indication it may challenge a deal if it occurs, people familiar with the matter said.
No formal notification of a probe has been made by the Federal Trade Commission as the two companies have yet to reach an agreement on a deal, said a person with direct knowledge of the matter. The person added there was no indication that any document had been destroyed by the parties.
The board of Seven & i Holdings, which owns 7-Eleven, turned down an unsolicited cash takeover bid last week from Canada’s Alimentation Couche-Tard, which operates Circle K, stating the offer “significantly undervalues” the company and fails to account for regulatory risks associated with the deal.
The FTC approached both sides as a precautionary measure as there has been an increasing number of cases where companies involved in an antitrust probe had destroyed internal documents to avoid scrutiny during a potential trial, according to people briefed on the matter.
The FTC and Couche-Tard declined to comment. Seven & i did not immediately respond to a request for comment. In a response to Seven & i’s board earlier this week, Couche-Tard said it could satisfy regulatory concerns with divestitures. The two chains “operate in the US in competition with a wide array of brick and mortar and online food and merchandise providers”, the company said.
Although no formal action has been launched, the FTC’s approach underscores the uphill battle that Couche-Tard would have to face if a deal was agreed. It would also give further ammunition to Seven & i to reject any bid.
The Financial Times previously reported that US regulators were likely to scrutinise the deal over concerns that it could lead to higher prices for consumers and hurt the labour market in areas where the two companies currently compete.
A merger between Couche-Tard, the operator of the Circle K brand, and Japan’s Seven & i, which owns the world’s largest convenience store chain, would result in the creation of one of the largest retail chains in the US. Combined, the companies have more than 14,000 US locations, many of them selling petrol, according to Opis, an energy market information service.
In the US, Couche-Tard’s road transport fuel gross profit margin was 45 cents a gallon in the fiscal year that ended in April 2024, according to its annual report. US retail petrol prices averaged about $3.60 a gallon over the same period, according to the Energy Information Administration.
“This is a combination Hail Mary, pipe dream and moonshot, because the Biden administration and the FTC are not going to look kindly on it,” Tom Kloza, global head of energy analysis at Opis, said of a potential deal. “From the highest levels of the White House, there is an obsession with gasoline prices.”
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