Japan’s Seven & i Holdings (OTCMKTS: SVNDY), the parent company of the 7-Eleven chain, has rejected an unexpected acquisition bid from the Canadian-based Alimentation Couche-Tard Inc. (ACT) (TSX:ACT) that could have created one of the world’s largest retail networks.
In an open letter to Alain Bouchard, chairman of ACT – which operates more than 16,000 Couche-Tard and Circle K stores across North America and Europe – Seven & i Holdings Chairman Stephen Dacus offered a thanks-but-no-thanks response to the offer to acquire all outstanding shares of Seven & i for $14.86 per share in cash.
“After a thorough review and discussion of your proposal, the 7&i Board has unanimously concluded, based on the unanimous recommendation of the Special Committee, that the proposal is not in the best interest of 7&i shareholders and other stakeholders,” Dacus wrote. “We are open to engaging in sincere discussions should you put forth a proposal that fully recognizes our standalone intrinsic value and addresses our concerns regarding certainty of closing in the current regulatory environment. However, we do not believe, for several critical reasons, that the proposal you have put forward provides a basis for us to engage in substantive discussions regarding a potential transaction.”
Dacus added the proposed acquisition was “opportunistically timed and grossly undervalues our standalone path and the additional actionable avenues we see to realize and unlock shareholder value in the near- to medium-term.” He also noted that even if the offer was improved, it failed to “adequately acknowledge the multiple and significant challenges such a transaction would face from U.S. competition law enforcement agencies in the current regulatory environment and provides no certainty to closing.”
Dacus also stated the offered did not fully consider “the crucial role that 7&i plays in everyday life in Japan across food retail, banking and other services … an area that would require further discussion should we reach that point.”
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