Seven & i to ask Couche-Tard to reconsider 'inadequate' offer, source says
Seven & i will ask Couche-Tard to reconsider its takeover bid, also referring to competition law concerns mainly in the U.S., although the company does not reject the offer and will continue to talk with the suitor, the source said.
TOKYO (Reuters) - Japanese retail giant Seven & i plans to inform Canada’s Alimentation Couche-Tard that its takeover bid price is "inadequate," according to a source familiar with the matter on Thursday.
Seven & i will ask Couche-Tard to reconsider its bid, citing concerns over competition laws, primarily in the U.S., while not completely rejecting the offer. The company intends to continue discussions with the Canadian suitor, the source added.
The board of Seven & i is expected to send a letter to Couche-Tard as early as Friday, according to a report by the Nikkei business daily, which first broke the news.
The Nikkei reported that Couche-Tard proposed an offer of approximately 6 trillion yen ($41.81 billion) in July.
News of Couche-Tard’s bid for the global operator of the 7-Eleven convenience store chain, which would mark the largest foreign takeover of a Japanese firm, sent Seven & i shares soaring nearly 23% on August 19.
A spokesperson for Seven & i declined to comment, while Couche-Tard’s new CEO Alex Miller expressed optimism during a post-earnings call, stating the company was looking forward to constructive talks with Seven & i.
Seven & i, with a market capitalization of roughly 5.6 trillion yen ($39 billion), previously formed a special committee to review the proposal, although the value or terms of the offer have not been publicly disclosed.
Couche-Tard, which owns the Circle-K convenience store chain, is valued at about $52 billion.
Despite Seven & i being larger than Couche-Tard in terms of sales, store count, and employees, its shares have underperformed for years. This has led to criticism from investors, including ValueAct Capital, regarding the company’s management and asset structure.
U.S.-based fund Artisan Partners, which holds about 0.85% of Seven & i's outstanding shares, said last week that Couche-Tard could enhance the Japanese company’s corporate value. Artisan Partners urged management to respond to the offer by September 19.
The bid for Seven & i reflects the growing interest in Japanese firms by Western investors, spurred by Japan’s push for improved corporate governance and the weakening yen.
Foreign acquisitions of Japanese companies nearly doubled to about 902.2 billion yen ($6.2 billion) in the first half of the year compared to the same period last year, according to data from LSEG.
($1 = 143.4900 yen)
(Reporting by Kiyoshi Takenaka, Kantaro Komiya, and Ritsuko Shimizu, additional reporting by Ananya Mariam Rajesh; Writing by Rocky Swift, Editing by David Goodman and Sharon Singleton)
