7-Eleven Rejects Takeover Bid: Couche-Tard Offer Deemed Undervalued

Seven & i Holdings, the parent company of 7-Eleven, has rejected a takeover offer from Canadian convenience store operator Alimentation Couche-Tard. The offer, which would have valued Seven & i at $38.55 billion, was deemed “not in the best interest” of the company’s shareholders and stakeholders by Seven & i’s special committee.

• The offer price was $14.86 per share.
• Seven & i argued that the offer was “opportunistically timed” and undervalued the company’s future potential.

7-Eleven’s Restructuring Plan

In April, Seven & i announced a restructuring plan that included growing 7-Eleven’s global presence and divesting its underperforming supermarket business. This plan was seen as a key factor in Seven & i’s decision to reject the offer.

• Seven & i believes the restructuring will unlock shareholder value in the near to medium-term.
• The plan aims to expand the 7-Eleven brand globally.

Regulatory Concerns

Seven & i raised significant concerns about the potential regulatory hurdles that a takeover would face in the United States.

• The company believes that a takeover would face “multiple and significant challenges” from U.S. anticompetition agencies.
• Seven & i argued that Couche-Tard failed to address regulatory concerns adequately.
• The company also pointed out that Couche-Tard’s proposal did not indicate any timeline for clearing regulatory hurdles or whether the company was “prepared to take all necessary action to obtain regulatory clearance, including by litigating with the government.”

Shareholder Perspectives

Artisan Partners, a U.S. fund with a stake in Seven & i, had previously urged the company to “seriously consider” the Couche-Tard offer and solicit offers for its Japanese subsidiaries.

• Artisan Partners believes that Seven & i has not done enough to maximize shareholder value.
• The fund believes that Seven & i should focus on capital allocation overseas.
• Artisan Partners is concerned about the pace of change within Seven & i and believes the company needs to adopt a more aggressive approach to reform.

Comgest’s Perspective

Richard Kaye, portfolio manager at independent asset management group Comgest, disagrees with Artisan Partners’ view, believing that Seven & i is already doing a “phenomenal job” in terms of logistics and product innovation.

• Comgest does not see the need for radical reform by a foreign acquirer.

7-Eleven’s Future

The rejection of the Couche-Tard offer signals that Seven & i is committed to its restructuring plan and believes it can achieve its strategic goals independently. The company is open to considering other proposals that are in the best interests of its shareholders, but will resist offers that it believes undervalue the company or fail to address regulatory concerns.

• Seven & i Holdings remains open to proposals that are beneficial to its stakeholders.