Seven & I Holdings, the operator of 7-Eleven, rejected an offer from convenience store rival Circle K, stating that the bid was too low and that the global business was worth more. The company expressed openness to considering proposals that benefit shareholders but emphasized the need for any deal to reflect the company’s intrinsic value and address regulatory concerns. The offer from Alimentation Couche-Tard, the parent company of Circle K, was made at $14.86 per share in cash, valuing the potential deal at $38.5 billion.
Seven & I Holdings confirmed that they were open to the possibility of a higher offer from Couche-Tard after news of the bid caused shares in the company to rally, pushing its market value above $38 billion. If successful, this deal would have been the largest cross-border takeover globally this year and the biggest foreign-led takeover of a Japanese company since 1995, according to Dealogic. The takeover bid has been closely watched in Japan as changes to corporate takeover guidelines are expected to boost foreign investment in the country.
Analysts raised concerns that a merger between Seven & I and Couche-Tard would create a company controlling nearly a fifth of the US convenience store market, potentially attracting antitrust scrutiny from regulators. Seven & I addressed this concern by stating that the proposal did not adequately acknowledge the challenges the transaction would face from US competition law enforcement agencies. Seven & I operates over 83,000 stores globally, including 7-Eleven shops and Speedway gas stations in the US, which it acquired from Marathon Petroleum for $21 billion in 2021.
Despite its American origins in Dallas, Texas, 7-Eleven became a global brand under the leadership of late Japanese entrepreneur Masatoshi Ito, who died at the age of 98 last year. The potential merger with Couche-Tard would expand the Canadian company’s footprint across North America and Europe, where it operates Couche-Tard and Circle-K stores, as well as Ingo fuel retailers. The bid for Seven & I was a significant one given the company’s history and global presence, making it a major deal in the world of convenience store chains.
The rejection of the initial offer from Couche-Tard indicates that Seven & I Holdings sees potential for greater value in its global business and is looking out for the interests of its shareholders. Despite openness to considering proposals, the company remains focused on protecting its intrinsic value and addressing regulatory concerns that may arise from any potential merger. The outcome of this bid and the potential impact on the convenience store market in the US and globally will be closely monitored by industry analysts and investors as the situation continues to develop.
