Canada’s Alimentation Couche-Tard has expressed its willingness to engage in confidential talks with Japan’s Seven & i Holdings, following the rejection of its $38.5 billion buyout offer, U.S. News & World Report reports.
Despite the setback, Couche-Tard remains keen on pursuing the acquisition, which would make it the largest foreign takeover of a Japanese company to date.
Shares of Seven & i, which owns the popular 7-Eleven convenience store chain, traded 2.2% higher in Tokyo on Monday at 2,179.5 yen ($15.25), slightly above Couche-Tard’s proposed all-cash offer of $14.86 per share, which the Japanese company turned down on Friday. Seven & i rejected the deal, citing concerns about shareholder interests and potential antitrust challenges in the US, where a combined entity would dominate the convenience store sector.
In a statement issued Sunday, Couche-Tard, owner of the Circle-K brand, reiterated its belief in the strategic value of the merger. It also signaled a willingness to make divestitures to address regulatory concerns, particularly in Japan.
“We are disappointed in 7&i’s refusal to engage in friendly discussions,” said Couche-Tard.
He stated that collaborative talks could create greater value for Seven & i shareholders. The Canadian company also expressed confidence in securing financing for the deal, which would be the largest all-cash offer since Elon Musk’s $40.2 billion acquisition of Twitter in 2022.
“We have secured a letter from our financial advisor confirming their high confidence in arranging the financing, subject to customary conditions,” Couche-Tard stated.
Seven & i remained skeptical, stating that even a “very significant” increase in the offer price would not fully address concerns about the takeover’s feasibility. So far, the company has not responded to Couche-Tard’s renewed proposal.
Some investors have pressed Seven & i to clarify how it plans to boost shareholder value after rejecting the bid. Artisan Partners, which holds more than 1% of Seven & i, argued that the reasons for rejecting the offer—price, regulatory hurdles, and stakeholder concerns—can all be addressed. The firm added that the decision now shifts the burden onto Seven & i’s management to outline a clear growth strategy.
While Seven & i outperforms Couche-Tard in terms of sales, stores, and employees, its stock has lagged behind, leading some investors to criticize the company’s management. JapanConsuming co-founder Michael Causton noted that the company is “currently undervalued” due to structural issues and other factors, making it an attractive target for Couche-Tard’s acquisition efforts.
Market analysts believe that Couche-Tard may need to raise its offer to re-engage Seven & i. The potential merger would expand Couche-Tard’s global reach and improve its economies of scale, boosting its market value of about $52 billion.
As the situation unfolds, there is speculation that Couche-Tard may approach Seven & i shareholders directly with its bid if the company’s management continues to resist discussions.
