7-Eleven’s parent company has received a takeover bid from Canada-based Alimentation Couche-Tard, a deal that could form a new global retail behemoth with over 100,000 stores.
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Japan’s Seven & i Holdings has established a committee of independent directors to review the offer, Bloomberg reported. Details of the bid, including how much the Canadian convenience store company is offering, haven't been released.
In a statement, Seven & i said its committee will conduct a “prompt, careful and comprehensive review of the proposal,” according to Bloomberg.
Under the proposal, Couche-Tard would acquire all of Seven & i’s outstanding shares. The company’s market value was $31B before its shares soared 23% on Monday following news of the potential merger, bringing its value to $38B.
Meanwhile, the Canadian company, which operates brands like Couche-Tard, Circle K and On the Run, is valued at about $58.5B.
In a confirmation to Bloomberg, Couche-Tard called the bid a “friendly, non-binding proposal.”
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Seven & i was created as a result of the integration of Ito-Yokado, Seven-Eleven Japan and Denny's Japan. It owns 85,000 stores, primarily in the U.S. and across Asia.
Couche-Tard has a smaller footprint, despite having a larger valuation. It operates just under 17,000 locations in North America and Europe.
Earlier this year, Seven & i further expanded into the U.S. with the $950M purchase of Sunoco LP gas stations. In 2020, the company spent $21B on the acquisition of Speedway’s properties.
The potential merger would be subject to approval by Canadian regulators and could draw criticism.
In 2021, Couche-Tard attempted to buy Carrefour for $20B, but the deal was blocked by France’s regulators.
Last year, activist investor ValueAct Capital called out Seven & i for underperformance, arguing that the company could be worth 40% more if it were to focus on 7-Eleven stores and address alleged managerial issues. At the time, Reuters reported that the holding company delivered annualized total returns of around 8%, compared to 20% at Couche-Tard.
Couche-Tard previously approached Seven & i about a merger in 2020, The New York Times reported, citing Japanese media. However, last year, Japan updated its guidelines to encourage companies to give serious consideration to such offers — and to be transparent with shareholders in doing so.
