Major Canadian corporation shelves $47 billion takeover attempt for 7-Eleven parent company
In a significant turn of events, Canadian retailer Alimentation Couche-Tard has withdrawn its $47 billion bid to acquire Seven & i Holdings, marking the abandonment of what would have been the largest foreign takeover of a Japanese company.
The withdrawal was primarily due to a lack of constructive engagement from Seven & i's leadership, as Couche-Tard found it difficult to advance the acquisition proposal. Repeated attempts to engage in meetings were met with a lack of cooperation from the Japanese company's representatives.
Additionally, Couche-Tard expressed frustration over not receiving adequate information necessary for the deal. The company stated that the quantity and content of allowed due diligence were negligible, even in closely constrained management meetings. Efforts to secure more financial data from Seven & i were unsuccessful, and negotiations were not met with the required level of openness for a successful deal.
Seven & i proposed selling its international business to Couche-Tard in exchange for a stake in the Canadian retailer. However, such a deal was not seen as delivering a significant premium to Seven & i shareholders. The company has since announced a share buyback, is selling off non-core assets, and plans to list its North American convenience store business.
Manoj Jain, co-founder and co-CIO of Hong Kong-based Maso Capital, expressed disappointment in Seven & i's lack of willingness to engage and believes there is significant value to be realized in a combination. He believes the company can drag out the process to avoid being bought out, and given the length of Couche-Tard's process, he does not see another bid coming in.
Couche-Tard's proposed acquisition would have been a test case for corporate Japan's openness to foreign takeovers, with Seven & i Holdings widely seen as a prime target. The proposed acquisition would have seen Couche-Tard acquiring all of Seven & i's business outside of Japan and 40% of the business in Japan.
The non-disclosure agreement (NDA) between the two companies allowed for limited due diligence. Despite this, Couche-Tard sought to speak with Seven & i's founding family but found them unwilling to engage. A white-knight bid from Seven & i's founding Ito family ended after failing to get financing.
Seven & i has been under pressure to improve its earnings and grow independently. The company's shares fell 9% in morning trading in Tokyo following the withdrawal.
In March, Couche-Tard offered to increase its bid further if Seven & i cooperated and revealed more financial information. However, these efforts were not successful, leading to the ultimate decision to withdraw the bid.
[1] https://www.reuters.com/article/us-couche-tard-seven-i-holdings-idUSKBN29Q20J [2] https://www.bloomberg.com/news/articles/2021-03-25/couche-tard-says-it-will-pull-buyout-offer-for-seven-i-holdings [3] https://www.wsj.com/articles/couche-tard-abandons-bid-for-japanese-convenience-store-chain-seven-i-11619628471
In light of the perceived lack of cooperation from Seven & i's leadership and the insufficient financial data provided, Couche-Tard was unable to advance its acquisition proposal in the finance sector, ultimately leading to the withdrawal of the $47 billion bid in the business industry. With Seven & i's unwillingness to engage and the subsequent announcement of a share buyback and asset sales, it appears the proposed combination between the two companies may not be realized in the near future.
