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By Anton Bridge and Abigail Summerville
TOKYO (Reuters) -Canada's Alimentation Couche-Tard on Tuesday said it is confident there is a "clear path" to overcome U.S. regulatory hurdles in its proposed $47 billion acquisition of Japan's Seven & i, and expressed frustration at the 7-Eleven owner's "limited engagement."
The Circle-K owner has been pursuing Seven & i for months even as it received a frosty reception from the Japanese retail giant.
"We have reiterated several times over the past few months that we intend to be friendly and persistent in pursuing a transaction," Couche-Tard said in a statement, rejecting the Japanese firm's position that the potentially transformational deal faces major regulatory hurdles.
"We have done that in the face of significant frustration and distraction," it added.
In some of its most detailed public comments yet, Couche-Tard said it had been working with Seven & i over a plan to divest some of their stores in the United States if the deal were to go through.
The comments are the latest salvo in what would be Japan's largest foreign buyout in history, and contradict Seven & i's newly appointed CEO Stephen Dacus, who has reiterated that significant regulatory hurdles stand in the way of a merger.
The companies are the top two players in the U.S. convenience-store market, with about 20,000 locations between them.
"We firmly believe there is a clear path to regulatory approval in the U.S.," Couche-Tard said, adding they "continue to be disappointed that engagement has been very limited."
Seven & i did not immediately respond to a request for comment.
Couche-Tard, which operates the Circle-K chain of convenience stores, said it had identified a portfolio of U.S. stores to potentially offload and had begun talks with prospective buyers at the behest of Seven & i.
In recent weeks, both Seven & i and Couche-Tard have reached out to potential buyers, including both strategic buyers and private equity firms, to gauge interest in the divestiture package, a person familiar with Seven & i's deliberations said.
Couche-Tard needed to find a clear divestiture path that identifies specific stores, a time frame, and a credible buyer, before it considers sharing confidential information with its competitor, the person added.
The Canadian suitor in late December submitted a proposal to the Japanese company outlining the commitments it was willing to make to meet U.S. regulatory approval and secure the deal. Those included the number of stores it was willing to divest and a large termination fee.
But Couche-Tard's proposal was insufficiently detailed, the person said, adding the proposed termination fee was also too low.
"What I do not think our shareholders would want is for us to spend two plus years in limbo just for that to be rejected by the U.S. courts," Dacus said last week.
Couche-Tard said it planned to finance the buyout with a combination of equity and debt.
It added that it had received letters from Goldman Sachs, Royal Bank of Canada, and Scotiabank in support of its financing, which would be sized to maintain its strong investment-grade credit rating.
(Reporting by Anton Bridge in Tokyo and Abigail Summerville in New York; Editing by Stephen Coates and Shri Navaratnam)
