Japanese 7-Eleven Operator Strikes Alimentation Couche-Tard's 'Undervalued' $39B Takeover Offer

Friday, Japanese convenience store operator Seven & i Holdings Co. SVNDF SVNDY rejected a takeover offer from Alimentation Couche-Tard Inc. ANCTF.

Two weeks ago, Alimentation, the convenience store operator, proposed an offer to buy Seven & I, the owner of 7-Eleven. Alimentation bid $31 billion, according to a report from Bloomberg.

If the transaction were approved, the proposed deal would be the biggest-ever foreign takeover of a Japanese firm.

In a letter, Seven & i rejected an unsolicited proposal to purchase all outstanding shares at $14.86 each. The decision was announced following a meticulous review by a Special Committee of independent directors.

Seven & I’s board found the current proposal, described as opportunistic and significantly undervalued, inadequate for further discussions.

The proposal’s timing and valuation were criticized, with the board arguing that they undervalued the company’s independent growth potential and strategic initiatives, particularly in the U.S. market.

Additionally, the board highlighted substantial regulatory challenges the proposed transaction could face, noting the lack of a clear plan to overcome these obstacles or ensure transaction closure.

While acknowledging the vital role of Seven & I in Japan’s food retail and banking sectors, the board remains open to negotiations that fully recognize the company’s value and can navigate the regulatory landscape effectively.

According to a Bloomberg report, the deal, valued at $39 billion, is too low and carries regulatory risk. Seven & I also signaled its willingness to consider a sweetened offer.

“We are open to sincerely consider any proposal that is in the best interests of 7&i shareholders and other stakeholders,” committee chair Stephen Dacus wrote in the letter. “However, we will resist any proposal that deprives our shareholders of the company’s intrinsic value or that fails to specifically address very real regulatory concerns.”

Reuters points out that although the offer was turned down, Couche-Tard’s proposal highlights the increasing attention Japanese firms are receiving from Western investors, attracted by Japan’s efforts to improve corporate governance.

7-Eleven is the biggest U.S. convenience store operator with a 14.5% market share in 2023, and Couche-Tard’s brands had a 4.6% share, Reuters noted, citing GlobalData.

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