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The Japanese owner of 7-Eleven said Friday it had rejected a takeover bid from Canadian retail giant Alimentation Couche-Tard, saying the proposal \u201cgrossly undervalues\u201d the company.<\/p>\n
The proposed purchase of Seven & i Holdings would be the biggest ever foreign takeover of a Japanese firm and combine 7-Eleven, Circle K and other brands across Asia, North America and Europe.<\/p>\n
As the world\u2019s biggest convenience store chain, 7-Eleven operates more than 85,000 outlets globally.<\/p>\n
Although the brand began in the United States, since 2005 it has been wholly owned by Seven & i.<\/p>\n
A letter from the Seven & i board to Alimentation Couche-Tard (ACT) said it was open to \u201cengaging in sincere discussions should you put forth a proposal that fully recognises our standalone intrinsic value\u201d.<\/p>\n
\u201cWe 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,\u201d it said.<\/p>\n
ACT operates more than 16,700 outlets in 31 countries and territories.<\/p>\n
Its purchase of Seven & i would be the biggest ever foreign takeover of a Japanese firm and create an international convenience store behemoth combining 7-Eleven, Circle K and other brands across Asia, North America and Europe.<\/p>\n
Seven & i said ACT had offered $14.86 per share in cash, which roughly matches its market value of $39 billion.<\/p>\n
But the board\u2019s letter called the proposal \u201copportunistically timed\u201d and said it \u201cgrossly undervalues our standalone path and the additional actionable avenues we see to realise and unlock shareholder value\u201d.<\/p>\n
It also raised regulatory concerns.<\/p>\n
\u201cYour proposal does not adequately acknowledge the multiple and significant challenges such a transaction would face from U.S. competition law enforcement agencies,\u201d it said.<\/p>\n
A quarter of 7-Eleven stores are found in Japan where they are a beloved institution, selling everything from concert tickets to pet food and fresh rice balls.<\/p>\n
Seven & i Holdings\u2019 other businesses include a major supermarket operator, restaurant chain Denny\u2019s, and Tower Records\u2014a once-popular U.S. record store that went bankrupt.<\/p>\n
Seven & i has reportedly asked the Japanese government to designate parts of the company as \u201ccore\u201d, which would make a takeover more difficult.<\/p>\n
Brands with the \u201ccore\u201d rating in Japan include manufacturers in the nuclear, space, rare earths and chip industries, as well as cybersecurity and infrastructure operators.<\/p>\n
The Canadian firm, however, is confident that it can have its way.<\/p>\n
CEO Brian Hannasch told an earnings briefing in New York on Thursday that Couche-Tard could \u201ceven consider a higher leverage if needed\u201d, indicating it has the capacity to raise more funds, according to Nikkei Asia.<\/p>\n
\u201cWe have the solid and robust balance sheet,\u201d Nikkei quoted Hannasch as saying.<\/p>\n
Shares in Seven & i were down 1.9 percent in Tokyo on Friday.<\/p>\n<\/div>\n