The agreement is a victory for Couche-Tard, which had been seeking since last year to deepen its engagement with Seven & i over its unsolicited 7.39 trillion ($67 billion) proposal to buy the Japanese company. Earlier this year, the companies agreed to seek a potential buyer for overlapping retail outlets as a prerequisite for takeover talks, given that US antitrust concerns could potentially derail any transaction.
"We appreciate the special committee of Seven & i engaging in substantive discussions regarding our proposal and providing access to diligence," Alex Miller, Couche-Tard chief executive officer, said in a statement.
Seven & i shares rose 2% in Tokyo. While that reflects some optimism over a higher chance for a deal, the stock continues to trade about 24% below Couche-Tard's proposed price.
The development is positive because it indicates Seven & i's board is considering the bid with greater interest than the market had previously interpreted, said Lorraine Tan, an equity analyst at Morningstar Asia Ltd.
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The discount reflects Seven & i's reluctance since August to enter into formal negotiations with Couche-Tard. The Japanese company's statement on Thursday also indicated its desire to remain independent.
"We remain committed to pursuing two parallel paths to ensure that value for shareholders and other stakeholders is maximized," Paul Yonamine, the chair of its special committee of board of directors at Seven & i, said. The two paths refer to a plan to split the company to focus on its convenience stores business and engagement with Couche-Tard.
Seven & i appointed Stephen Dacus, former chair of the committee, as CEO in March to overhaul the retailer in order to to boost growth and deliver greater shareholder value. Seven & i is selling its underperforming supermarkets and stores, seeking a public listing of its US business and will buy back 2 trillion of shares through 2030.
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The company plans to boost investment in its US stores using cash from a mooted listing of its American retail operation next year, as well as reviewing its supply chain globally to cut costs down, Dacus said in an interview last month.
"Unlocking significant value for shareholders and other stakeholders remains Seven & i's top priority," Yonamine said.
Both moves should be positive to shareholders, according to Morningstar's Tan. "They will be able to determine which option provides the optimal return if both prove to be viable," she said.
