7-Eleven’s parent company to tell Couche-Tard takeover offer price insufficient: Source

Seven & i Holdings Co plans to tell Alimentation Couche-Tard that its offer price for the Japanese convenience store operator is insufficient and that competition law concerns remain. 

The company’s board will send a letter to Couche-Tard on Sept 6 Japan time outlining its response to the deal following a review of the proposal by a committee of independent outside directors, according to people familiar with the matter who were unauthorised to speak publicly.

Seven & i will tell the Canadian company that its bid does not reflect the value of its business and growth strategy. Couche-Tard’s offer for Seven & i was just under US$15 per share, according to a person familiar with the matter. That would value the Japanese company at about six trillion yen (S$54.3 billion) at the time of the offer, the person said.  

The Japanese chain will also raise concerns about breaching US antitrust laws in the letter.

A Seven & i spokesperson declined to comment. Couche-Tard didn’t immediately respond to a request for comment. The news was first reported by Japan’s Nikkei newspaper.

Mr Alex Miller, currently Couche-Tard’s chief operating officer and soon-to-be chief executive officer, told analysts on the company’s earnings call Sept 5 that it wants to engage constructively with Seven & i and that it’s confident it can finance the deal.  

Couche-Tard revealed its takeover approach for the parent company of the 7-Eleven convenience store chain in August. The proceedings are being closely watched at home and abroad as a test of new government guidelines on mergers and acquisitions instructing companies to seriously consider takeover offers. 

A deal between the two companies could create a global convenience store behemoth with more than 100,000 outlets. That could invite scrutiny from US competition authorities. Another potential obstruction for the takeover is that the Japanese government can block the deal or ask for changes in the terms, because Seven & i is on a list of companies considered important for national security.

Previously, an attempt to acquire such a well-known and large Japanese business at such scale would have been dismissed as unlikely, given the protectionist tendencies of the government and corporate boards prioritising stability over shareholder value. But new corporate guidelines have been issued, aimed at injecting more vigor into corporate Japan through improved governance and protections for investors.

Couche-Tard’s buyout offer came as the Japanese retail conglomerate has been under pressure from activist shareholder ValueAct Capital Management to sharpen its focus on 7-Eleven’s operations, and pivot away from its supermarket and department store businesses. The group also pushed unsuccessfully to oust its chief executive, Mr Ryuichi Isaka. 

In response, Seven & i has taken restructuring measures and initiated a buyback. BLOOMBERG