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7-Eleven’s parent company, Seven & i Holdings SVNDY+0.61%, has rejected a $38 billion (£29.2bn) buyout offer from Canadian convenience store operator and competitor Alimentation Couche-Tard ACT-0.16% (ACT).
Seven & i said in a letter released on Friday that it is open to “sincerely” considering any proposal that benefits its shareholders and stakeholders. However, the company said the current offer “grossly” undervalues its intrinsic worth and growth potential.
Stephen Dacus, chairman of the Seven & i board, criticized the takeover bid as “opportunistically timed,” and emphasized that the company is only interested in offers that can “unlock shareholder value.”
Dacus added that Seven & i is “confident” their planned strategies, especially those involving their U.S. business, will effectively boost shareholder value.
The proposal falls short in addressing significant regulatory hurdles posed by U.S. competition law, according to Dacus. He said the bid lacks details on overcoming these obstacles. Moreover, Couche-Tard does not clarify whether it is prepared to engage in legal battles to gain regulatory approval.
While Couche-Tard has acknowledged the importance of Seven & i in Japan, particularly in areas like food retail and banking, Dacus noted that these issues would require further discussion if negotiations move forward.
If the deal were to proceed, Couche-Tard’s presence in North America would expand substantially. The Quebec-based retailer has about 16,800 locations globally. Meanwhile, 7-Eleven boasts a footprint of roughly 85,000 stores in 20 countries and territories, making it the the largest convenience store chain in the world.
Although Seven & i preferred to keep the proposal’s details confidential, the company decided to make the letter public to maintain transparency with shareholders.
In April, the Japanese retail giant hinted at a potential IPO of its superstore business, with the goal to grow its convenience store division. That segment, which includes 7-Eleven, specializes in online shopping for food and everyday items like lunch boxes, books, and games.