Trading company Itochu Corp. is withdrawing from a management buyout of Seven & i Holdings Co. Ltd. proposed by the global retailer’s founding family and designed to block a takeover attempt by global convenience-store retailer Alimentation Couche-Tard Inc.
After receiving an acquisition proposal from Laval, Quebec-based Alimentation Couche-Tard in August, Seven & i’s founding Ito family began talks to take the company private for an estimated $58 billion.
Itochu had considered investing 1 trillion yen ($6.69 billion) in the deal, according to a Reuters report.
“We have been earnestly considering the request from the founding family for participation as a strategic partner in their acquisition proposal of Seven & i Holdings Co. Ltd.; however, we would like to inform you that we have decided to terminate our consideration of this matter,” Tokyo-based Itochu said in a statement posted on its website. The Family Mart convenience-store chain, Japan’s second largest after Seven & i’s Seven Eleven Japan, is a subsidiary of Itochu.
“In response to today’s media report stating the founder families’ proposal, Seven & i Holdings Co. Ltd. confirmed that it has learned from Junro Ito, vice president and a representative director of Seven & i, and Ito-Kogyo Co. Ltd., that they have been unable to secure the financing required to submit a definitive proposal to acquire Seven & i. As a result, there is no actionable proposal from Mr. Junro Ito and Ito-Kogyo for Seven & i to consider at this time,” Tokyo-based Seven & i said in a statement on Thursday. “Seven & i remains committed to exploring all opportunities to unlock value for shareholders and continues to assess a full range of strategic alternatives, including the proposal from Alimentation Couche-Tard Inc. The Special Committee is engaging constructively with ACT to determine if an actionable proposal can be achieved that addresses the serious U.S. antitrust challenges that any such transaction would face.”
After Couche-Tard in August submitted an acquisition proposal to Seven & i, the Seven & i board formed a special committee of independent outside directors to review the offer. It has rejected the initial proposal twice, saying the bid “undervalues” the company. Couche-Tard has since raised its offer, from $14.86 per share or approximately $39 billion, to $18.19 per share or approximately $47.2 billion.
Going private would allow the operator of more than 80,000 7-Eleven convenience stores around the world to retain its management and remove pressure from shareholders to sell off more of its assets, as well as eliminate the threat from a bidder that it may see as hostile, said Reuters.
A management buyout offer could also be a tactic to force Couche-Tard to bid more, the news agency said.
Seven & i’s chief financial officer, Yoshimichi Maruyama, said in early January that the special committee is still considering Couche-Tard’s acquisition proposal and the management buyout proposal.
“At this point Couche-Tard appears as the only party with a nonbinding offer to acquire Seven & i; however, Couche-Tard has not been able to engage in serious discussions with Seven & i and has not been granted access to a data room. It is not clear if Seven & i’s shareholders will be able to put enough pressure on management to sit down and discuss with Couche-Tard,” Martin Landry, managing director at investment firm Stifel, St. Louis, said in a research note. “We believe that it will be difficult for Seven & i’s management to come up with a better alternative (through spinoff and asset sales) than Couche-Tard's offer; however, it is not clear if Seven & i’s shareholders will be able to put enough pressure on Seven & i’s management to sit down and discuss with Couche-Tard. Seven & i’s [annual general meeting] is scheduled in May, which leaves little time for both parties to reach a definitive agreement.”
“Couche-Tard remains committed to reaching a mutually agreeable transaction that benefits both companies' customers, employees, franchisees and shareholders, creating a global retail champion,” a Couche-Tard spokesperson said in a statement provided to CSP.
“Since the public disclosure of our proposal over six months ago, we have engaged many stakeholders in Japan over multiple visits, and we appreciate their ongoing support. We continue to affirm our intention to maintain Seven & i’s role as an important part of Japan’s emergency response infrastructure, protect the privacy and security of customers, successfully address the regulatory approvals process and invest in the growth of the business. We look forward to working constructively with Seven & i to reach a friendly agreement,” the company said.
7-Eleven is No. 1 on CSP’s 2024 Top 202 ranking of U.S. c-store chains by store count. Alimentation Couche-Tard is No. 2.
Seven & i operates convenience stores, superstores, supermarkets, specialty stores, foodservices, financial services and IT services. Irving, Texas-based 7-Eleven Inc. operates, franchises or licenses more than 83,000 convenience stores in 19 countries and regions, including more than 13,000 7-Eleven convenience stores in the United States and Canada.
Couche-Tard operates in 31 countries and territories, with more than 16,700 stores. Its network includes more than 7,100 stores in the United States, primarily under the Circle K banner.
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