Biggest overseas takeover deal stalled in Japan, 7-Eleven rejects Canadian bid

The Japanese proprietor of 7-Eleven mentioned Friday it had rejected a takeover bid from Canadian retail big Alimentation Couche-Tard, saying the proposal “grossly undervalues” the corporate.

The proposed buy of Seven & i Holdings can be the most important ever overseas takeover of a Japanese agency, merging 7-Eleven, Circle Okay and different manufacturers throughout Asia, America and Europe.

As the world’s greatest comfort retailer chain, 7-Eleven operates greater than 85,000 retailers globally.

While the model started within the United States, it has been wholly owned by Seven & i since 2005.

A letter from the Seven & i board to Alimentation Couche-Tard (ACT) mentioned it was open to “engaging in sincere discussions should you put forth a proposal that fully recognises our standalone intrinsic value”.

“We do not believe, for several critical reasons, that the proposal you have put forward provides a basis for us to engage in substantive discussions regarding a potential transaction,” it mentioned.

ACT operates greater than 16,700 retailers in 31 international locations and territories.

The takeover bid was introduced in August, and on Friday Seven & i mentioned ACT had provided $14.86 per share in money, roughly matching its market worth of $39 billion.

The board’s letter known as the proposal “opportunistically timed” and mentioned it “grossly undervalues our standalone path and the additional actionable avenues we see to realise and unlock shareholder value”.

It additionally raised regulatory considerations.

“Your proposal does not adequately acknowledge the multiple and significant challenges such a transaction would face from US competition law enforcement agencies,” it mentioned.

‘Tremendous brand power’ 

1 / 4 of 7-Eleven shops are present in Japan the place they’re a beloved establishment, promoting every little thing from live performance tickets to pet meals and contemporary rice balls.

Seven & i’s different companies embody a serious grocery store operator, restaurant chain Denny’s, and Tower Records – a once-popular US file retailer that went bankrupt.

The firm has reportedly requested the Japanese authorities to designate components of the corporate as “core”, which might make a takeover tougher.

Entities rated “core” in Japan embody producers within the nuclear, uncommon earths and chip industries, in addition to cybersecurity and infrastructure operators.

The Canadian agency, nevertheless, continues to be assured that it will probably have its approach.

CEO Brian Hannasch informed an earnings briefing in New York on Thursday that Couche-Tard may “consider a higher leverage if needed”, indicating it has the capability to lift extra funds, in response to Nikkei Asia.

“We have the solid and robust balance sheet,” Nikkei quoted Hannasch as saying.

Shares in Seven & i had been down 1.9 per cent in Tokyo on Friday.

One shareholder, US fund Artisan Partners Asset Management, final week urged Seven & i to carry swift negotiations with ACT “to achieve the best possible outcome for shareholders”.

“ACT is uniquely positioned to enhance SIH’s (Seven & i Holdings’) corporate value,” it mentioned, referring to the Canadian firm’s profitable growth of Circle Okay, which it acquired twenty years in the past.

It added that “7-Eleven has tremendous brand power that could be leveraged on a global basis” and that “unlike SIH, ACT’s overseas expansion track record is excellent”.