Seven & i Holdings Co, the Japanese convenience store chain operator valued at about US$31 billion, has received a buyout proposal from Canadian rival Alimentation Couche-Tard Inc in what would be the largest-ever foreign takeover of a Japanese company if realized.
The “confidential, preliminary” offer would be examined by an independent committee and the board of directors has made no determination at this time whether to accept or reject it, said Seven & i in a statement yesterday, following a report on the bid by Japan’s Nikkei newspaper. Neither offered details on the value of Couche-Tard’s offer.
Shares in the Japanese company jumped 23 percent in Tokyo yesterday, their largest gain on record.
Photo: Reuters
Seven & i has come under pressure from activist fund ValueAct Capital Management LP over perceptions that its assets are worth more than the company is capitalizing on. In reaction, it has taken restructuring measures and initiated a buyback after fending off efforts to oust chief executive officer Ryuichi Isaka.
ValueAct previously pushed the Japanese retailer to narrow its business focus to 7-Eleven stores, saying that as a standalone listed company the convenient store business could be worth as much as ￥8,500 per share. Seven & i shares closed at ￥2,161 yesterday.
While best known for its 7-Eleven stores, the company’s operations also include Denny’s Corp’s Japan restaurants, the Ito-Yokado supermarket chain and its own bank. Globally, its empire spans 85,000 convenience stores, gasoline stations and retail outlets.
Couche-Tard, with a market value of C$80 billion (US$58.5 billion), operates convenience stores around the world under its own brand, as well as Circle K and Ingo.
“It all depends on the price, and I guess the weak yen has made it more attractive and anything north of ￥7 trillion, the management would have a tough time rejecting,” said Amir Anvarzadeh, a strategist at Asymmetric Advisors Pte.
However, “knowing the Seven & i management, you can bet on them resisting this if the price is lower,” he added.
Couche-Tard’s balance sheet itself might not be strong enough to sustain a strong cash offer, LightStream Research analyst Mio Kato said.
“I don’t think Seven & i would want to sell and without an attractive cash offer, I think the probability of something happening is quite slim,” he said.
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