FTC may probe potential Seven & i, Couche-Tard deal, sources say

By Abigail Summerville

NEW YORK (Reuters) -U.S. antitrust regulators have told Seven & i it may probe a potential deal with Canada's Alimentation Couche-Tard, two sources familiar with the matter said, in an early sign that a merger could face regulatory scrutiny.

The Federal Trade Commission sent Seven & i a notice of its intent after Couche-Tard's $38.5 billion offer for the Japanese retail giant was made public on Aug. 19, the sources said, requesting anonymity because they were not authorized to speak publicly about the matter.

The FTC reached out to the company and asked it to preserve all documents that may be relevant to a review of a potential acquisition by Couche-Tard, the sources said.

The FTC declined to comment. Couche-Tard also declined to comment.

Seven & i has rejected Couche-Tard's approach, in part citing U.S. antitrust concerns.

Seven & i's businesses include the Seven-Eleven convenience store chain in Japan and North America, while Couche-Tard businesses include the Couche-Tard and Circle K convenience store chains in North America.

A source familiar with the FTC’s thinking said the agency notified attorneys from the companies of their responsibility to advise clients to preserve documents. While there is no indication that the two companies have destroyed any documents, the FTC is concerned that defense attorneys are advising companies to destroy documents ahead of antitrust investigations.

Recent antitrust investigations that have included allegations of document destruction include cases against Google and Amazon.

Couche-Tard's shares were down 2.3% in midday trading on Tuesday.

Under Chair Lina Khan, the FTC has been aggressive in examining deals for antitrust issues. Other high-profile cases that have come under scrutiny include grocery chain Kroger's <KR.N> proposed $25 billion acquisition of Albertsons, and fashion company Tapestry's $8.5 billion deal to buy Capri .

In a statement last week, Couche-Tard highlighted its successful track record of acquisitions and working with U.S. and other regulators. The company said it would consider divestitures to secure regulatory approvals.

Seven & i has said Couche-Tard’s proposal does not "adequately acknowledge the multiple and significant challenges" it would face from antitrust authorities and "provides no certainty to closing.”

(Reporting by Abigail Summerville; editing by Paritosh Bansal and Leslie Adler)