Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Canada’s Alimentation Couche-Tard has withdrawn its record-breaking $46bn proposal to acquire Japan’s Seven & i Holdings, bringing an end to its year-long campaign to pull the 7-Eleven owner to the negotiating table on friendly terms.
Couche-Tard, which owns the Circle K chain, on Thursday said a lack of “constructive engagement” by Seven & i had prompted it to withdraw the unsolicited takeover proposal that would have resulted in the largest foreign acquisition of a Japanese company.
Shares in Seven & i fell 9.3 per cent on Thursday to ¥2,007, which is 22 per cent below the Couche-Tard offer price.
The withdrawal of Couche-Tard’s proposal closes a chapter that had electrified the Tokyo stock market, and rekindled global investor hopes that a large and active market for takeovers of Japanese companies was finally being established.
Couche-Tard said in a letter to Seven & i’s board: “There has been no sincere or constructive engagement from 7 & i that would facilitate the advancement of any proposal.”
It added: “You have engaged in a calculated campaign of obfuscation and delay, to the great detriment of 7 & i and its shareholders.”
The 2024 bid by the Canadian group, which placed a hefty 48 per cent premium on the pre-bid value of the target company, had prompted large numbers of event-driven hedge fund investors to hold the stock.
Traders had predicted a heavy sell-off of Seven & i’s shares, given the large number of hedge funds that had bought the stock on the expectation that the deal would ultimately succeed. “Some may guess there is a chance that Couche-Tard comes back with a hostile bid, but I’m not sure how much conviction there will be behind that,” said one Tokyo-based broker.
The fact that the bid emerged at all was widely interpreted as evidence that Japan was finally opening up to the possibility of large-scale takeovers by foreign buyers.
Several of Seven & i’s largest shareholders have said the deal tested Japan’s wider progress on corporate governance reform, transparency and attention to shareholder interests.
The two sides had agreed to work on a solution to address competition authorities’ concerns. These included a possible sale of 2,000 stores in the US where their store footprint significantly overlapped.
The Canadian group’s approach prompted the Japanese retail group to overhaul management, sell a stake in domestic general merchandise stores and draw up plans to list its US arm.
Seven & i confirmed the end of discussions and the withdrawal of Couche-Tard’s proposal. “While we are disappointed by ACT’s decision, and disagree with their numerous mischaracterisations, we are not surprised,” Seven & i said in a statement.
Since the initial proposal, there had been significant changes in the global economy, exchange rates and markets, it said. Seven & i added that it remained committed to its own plan, which it described as “concrete and actionable”.
Seven & i’s founding Ito family had attempted to muster a $58bn management buyout with the support of trading house Itochu as an alternative to Couche-Tard that would have kept the retailer under Japanese ownership. But this attempt was dropped in February because of the difficulty in raising funds.
In the letter, Couche-Tard revealed it had proposed an alternative structure under which it would acquire the entirety of Seven & i outside of Japan and 40 per cent of the Japanese operations.
