Written by Urvi Dugar
Canadian retailer Alimentation Couche-Tard said Sunday it is willing to enter into confidential discussions with Japanese retail giant Seven & I Holdings Inc. about a $38.5 billion takeover offer and remains keen to pursue the purchase.
Shares of Seven & I rose 3% in early trading in Tokyo on Monday.
7-Eleven, the chain’s operator, said the Canadian company’s $14.86-per-share all-cash offer was not in the best interests of its shareholders and could face antitrust challenges in the United States.
Coach Tard said it will consider divestments that may be required to secure regulatory approvals and believes it will offer a compelling combination that will address all regulatory concerns in Japan.
“Given the mutual benefits that could result from this merger, we are disappointed that 7&i has declined to enter into friendly discussions,” Coach Tard said in a statement. “We are confident that collaborative discussions will result in our ability to create increased value for 7&i shareholders.”
Financing has been arranged for the deal, which will be the largest foreign takeover of a Japanese company in history, Koch-Tard said.
“We have received a letter from our financial adviser stating that they are very confident in their ability to arrange financing for the proposed transaction, on customary terms,” the company said.
Seven & I, which said last month it had received an offer from Circle-K owner Couche-Tard without specifying the price, announced the offer on Friday at $14.86 per share.
The Japanese company said earlier that even if Coach Tard increased the offer “very significantly” it would still be concerned about whether the takeover would be able to go ahead.
A 7-Eleven spokesperson could not immediately comment on Couche-Tard’s renewed approach.
According to data from the London Stock Exchange, the new entity will be the largest in the retail sector by a large margin, and will be the largest cash offer for a company since Elon Musk bought Twitter for $40.2 billion in 2022. Last month, Mars offered $35.2 billion to buy food group Kelanova.
Bloomberg News had previously reported on the plans and that CouchTard had not ruled out approaching shareholders directly with its offer.
While Seven & i is much larger than Couche-Tard in terms of sales, stores and employees, its shares have underperformed for years, prompting complaints from investors including ValueAct Capital about the company’s management and asset structure.
The deal, if agreed upon, would allow Couche Tard, which has a market value of about $52 billion, to enhance its global reach and improve economies of scale.