Seven & i Holdings’ Board has rejected Alimentation Couche-Tard Inc.’s nearly $40 billion takeover bid, saying the proposal “grossly undervalues” the global convenience-store retailer’s intrinsic value and opportunities to unlock that value.
In a letter dated Friday, Stephen Dacus, chair of the special committee that was formed to review the acquisition proposal, said he was writing on behalf of the Seven & i Holdings board of directors regarding the non-binding and preliminary proposal to acquire all outstanding shares of Seven & i for $14.86 per share in cash.
“I want to emphasize that the 7&i board is single-mindedly focused on delivering value for 7&i shareholders and other stakeholders,” the letter reads. “We are open to sincerely consider any proposal that is in the best interests of 7&i shareholders and other stakeholders; however, we will resist any proposal that deprives our shareholders of the company’s intrinsic value or that fails to specifically address very real regulatory concerns.”
After a thorough review and discussion of the proposal, “the 7&i Board has unanimously concluded, based on the unanimous recommendation of the Special Committee, that the proposal is not in the best interest of 7&i shareholders and other stakeholders,” Dacus wrote, though he added, “We are open to engaging in sincere discussions should you put forth a proposal that fully recognizes our standalone intrinsic value and addresses our concerns regarding certainty of closing in the current regulatory environment.”
The letter continues that the committee does not believe, “for several critical reasons,” that the proposal provides a basis for Seven & i to engage in substantive discussions regarding a potential transaction.
The letter elaborates that even if Couche-Tard could improve the “value element of your proposal very significantly, your proposal does not adequately acknowledge the multiple and significant challenges such a transaction would face from U.S. competition law enforcement agencies in the current regulatory environment and provides no certainty to closing.”
The letter continues, “Beyond your simple assertion that you do not believe that a combination would unfairly impact the competitive landscape and that you would ‘consider’ potential divestitures, you have provided no indication at all of your views as to the level of divestitures that would be required or how they would be effected. Your proposal also does not indicate, for example, the timeline you believe would be required to clear regulatory hurdles, or whether you would be prepared to take all necessary action to obtain regulatory clearance, including by litigating with the government.”
The letter also addresses the services Seven & i provides to the Japanese people: “While you acknowledge the crucial role that 7&i plays in everyday life in Japan across food retail, banking and other services, this is clearly an area that would require further discussion should we reach that point,” it says.
Couche-Tard, which owns Circle K convenience stores, on Aug. 19 submitted a proposal to acquire Seven & i Holdings Co. Ltd. The Seven & i Board of Directors has formed a special committee, comprised solely of independent outside directors, led by Dacus as chairperson, to review the proposal, the company said at the time.
CSP has reached out to Couche-Tard and Seven & i but has not yet heard back from either.CSP reported Sept. 4 that Artisan Partners International Value Strategy, an investor of Seven & i Holdings, is pushing the company to promptly review Circle K-owner Alimentation Couche-Tard’s proposal to purchase the company. The investor, who owns more than 1% of the outstanding shares of 7-Eleven’s parent company, asked Seven & i Holdings for an update on negotiations by Sept. 19.
- 7-Eleven is No. 1 on CSP’s 2024 Top 202 ranking of U.S. c-store chains by store count. Alimentation Couche-Tard is No. 2.
Seven & i is a global operator of convenience stores, superstores, supermarkets, specialty stores, foodservices, financial services and IT services. 7–Eleven International LLC franchises or licenses more than 44,000 stores in 19 countries and regions. The brand also operates corporate or franchise stores in the United States, Canada, Mexico and Japan. Globally, the 7-Eleven trademark is represented in approximately 83,000 stores.
Irving, Texas-based 7-Eleven Inc. operates, franchises or licenses more than 83,000 convenience stores in 19 countries and regions, including more than 13,000 7-Eleven convenience stores in the United States.
Laval, Quebec-based Couche-Tard operates in 31 countries and territories, with more than 16,700 stores. Its network includes more than 7,100 stores in the United States under the Circle K and Holiday Stationstores banners, and approximately 2,100 in Canada under the Circle K and Couche-Tard banners.
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