Seven & i Holdings, the Japanese owner of the global 7-Eleven convenience store chain, has rejected a near $39 billion cash bid from Canada’s Alimentation Couche-Tard. The company stated that the offer “grossly undervalues” Seven & i and is not in the best interest of its shareholders and stakeholders. Couche-Tard’s proposal offered to acquire all outstanding shares at $14.86 apiece in cash, representing a premium of roughly 21%, but slightly below its stock price as of Friday.
In a letter to Couche-Tard, Seven & i described the proposal as “opportunistically timed” and “grossly undervaluing our standalone path.” The company also raised concerns about potential challenges from U.S. competition law enforcement agencies in the current regulatory environment. Both 7-Eleven and Circle K are among the world’s largest convenience store chains by number of stores. A tie-up between Seven & i and Couche-Tard would create one of the world’s largest retail groups with over 100,000 convenience stores, retail outlets, and gas stations.
The potential deal, if approved, would be the largest-ever foreign takeover of a Japanese company and is seen as a test of Japan’s new guidelines to promote mergers and acquisitions. Seven & i has reportedly planned to seek government protection to defend itself against Couche-Tard’s bid, potentially changing its designation to “core” to require officials’ vetting of any entity seeking to acquire more than 10% of the company. The company was founded by the late Masatoshi Ito and is currently owned by his children, who collectively own more than 10% of Seven & i.
Couche-Tard’s CEO-elect Alex Miller expressed confidence in financing the deal and stated their intention to engage with Seven & i in a constructive manner. The company did not immediately respond to a request for comment. The proposed merger could trigger scrutiny from U.S. antitrust regulators, potentially requiring the sale of assets. The bid comes as Seven & i has been facing pressure from activist investors to implement structural reforms for higher shareholder returns.
Overall, the rejection of Couche-Tard’s bid by Seven & i highlights the company’s determination to pursue its standalone path and unlock shareholder value in the near to medium-term. With both companies being major players in the convenience store industry, a potential merger would create a retail giant with a global presence. The outcome of this proposed deal could have significant implications for both companies and the broader retail sector.
