Seven & I Holdings, the operator of 7-Eleven, has rejected an opening offer from Circle K’s owner, Alimentation Couche-Tard, indicating that the bid was too low and that Seven & I’s global business was worth more. Seven & I stated that it was open to sincerely considering any proposal that is in the best interests of its shareholders but would resist any offer that deprived its shareholders of the company’s intrinsic value or failed to address regulatory concerns. The offer from Couche-Tard to acquire all of Seven & I’s outstanding stock was made at $14.86 per share in cash, making the potential deal worth $38.5 billion.
The Financial Times reported that Seven & I was open to the possibility of a higher offer from Couche-Tard, leading to a rally in Seven & I’s shares. This potential deal value would be the largest foreign-led takeover in Japan since 1995 and the largest cross-border takeover globally this year. The takeover bid has been closely watched in Japan, as the government recently made it harder for companies to ignore unsolicited offers in an effort to boost foreign investment in the country.
A potential merger between Seven & I and Couche-Tard would expand the latter’s footprint across North America and Europe, where it operates convenience stores and fuel retailers. Analysts raised concerns about the combined entity controlling nearly a fifth of the US convenience store market, which could attract scrutiny from America’s antitrust regulator. 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 Holdings operates more than 83,000 stores worldwide, including 7-Eleven shops and the Speedway chain of gas stations in the United States. It acquired Speedway from Marathon Petroleum for $21 billion in 2021, increasing its presence in North America. While 7-Eleven’s origins trace back to Dallas, Texas, it was a Japanese entrepreneur, Masatoshi Ito, who turned it into a global brand. Ito passed away last year at the age of 98.
Overall, Seven & I Holdings’ rejection of the initial offer from Couche-Tard indicates that the company believes its global business is worth more and that any proposal should be in the best interests of its shareholders. The potential merger between the two companies would expand Couche-Tard’s presence in North America and Europe but may face challenges from regulatory authorities, particularly in the US. The outcome of this proposed deal will be closely watched in Japan and globally as it could be a significant foreign-led takeover in both countries.
