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Canada’s Alimentation Couche-Tard has withdrawn its record-breaking $46bn proposal to acquire Japan’s Seven & i Holdings, bringing an end to its year-long campaign to pull the 7-Eleven owner to the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 led to its decision to withdraw the unsolicited takeover proposal that would have resulted in the largest deal for a Japanese company by a foreign group.
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.”
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”.
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. Trading in the stock was suspended on Thursday morning.
A Tokyo-based broker said: “I think we are going to see some disappointment and pretty heavy rotation out of this stock today from the hedge funds. 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.”
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, after decades of strong resistance.
Several of 7 & 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’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.
