Couche-Tard’s $38.6 billion offer dismissed by Seven & i Holdings

MENA Newswire News Desk: Seven & i Holdings, the parent company of 7-Eleven, has rejected a $38.6 billion acquisition offer from Canadian convenience store operator Alimentation Couche-Tard. The Tokyo-based company stated that the proposal “grossly undervalues” the business and does not reflect its growth potential or future shareholder value.

In a filing with the Tokyo Stock Exchange, Seven & i revealed that Couche-Tard’s offer stood at $14.86 per share, which would value the company at approximately $38.55 billion. Despite the high value, Seven & i’s special committee, led by Chairman Stephen Dacus, dismissed the proposal as opportunistic and poorly timed, noting that it does not account for the company’s future growth opportunities.

Dacus remarked that the proposal disregarded the significant challenges posed by U.S. regulatory agencies regarding antitrust concerns. He further added that even a significantly higher offer would face numerous regulatory hurdles, particularly in the U.S. market. In his letter, Dacus emphasized that Couche-Tard’s lack of clarity regarding divestitures and anti-competition issues raised additional concerns.

Seven & i has been pursuing its own restructuring plan, focusing on expanding 7-Eleven’s global presence while divesting underperforming business units. The company recently announced plans to streamline its supermarket operations, indicating a commitment to maximizing value through internal actions rather than external acquisitions.

The rejection of the bid highlights Seven & i’s determination to remain independent. In response to the decision, Ben Herrick, associate portfolio manager at Artisan Partners, expressed disappointment, stating that Seven & i’s management had not maximized the company’s corporate value. Herrick, whose firm holds a stake in the company, criticized the board’s slow pace in enacting reforms and capital allocation.

Despite Herrick’s concerns, other analysts argue that Seven & i is managing well on its own. Richard Kaye, portfolio manager at Comgest, commended the company’s efforts in logistics and innovation, noting that the convenience store giant remains a formidable player in the market. Kaye argued that foreign intervention would not necessarily improve the company’s operational efficiency. While Seven & i remains open to future proposals, it has made clear that any offer must align with its long-term vision and address regulatory concerns thoroughly.