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A merger between Couche-Tard, which operates the Circle K brand, and Seven & i would result in the creation of one of the largest retail chains in the USSeven & i Holdings has brought on Japan’s biggest investment bank to advise its board in preparation for a potential takeover battle with Canada’s Alimentation Couche-Tard, whose opening $39bn bid for the 7-Eleven owner was rejected.
Nomura was recently appointed as an adviser to Seven & i’s special committee of independent board directors set up to examine the takeover offer for the world’s largest convenience store chain, according to three people with knowledge of the situation.
News of the appointment comes after Couche-Tard said this week it remained “highly focused” on the takeover, despite Seven & i’s rejection of a preliminary offer. Couche-Tard added that it was prepared to have “collaborative and friendly discussions” on a deal.
A merger between Couche-Tard, which operates the Circle K brand, and Seven & i would result in the creation of one of the largest retail chains in the US and be the biggest buyout of a Japanese company by a foreign group.
The Canadian group’s opening offer of $14.86 a share in cash — which gave Seven & i an estimated enterprise value of close to $60bn, according to analysts — was rejected by the Japanese group this month as “grossly” undervaluing its business.
Seven & i added that any takeover offer risked running into competition issues in the US, where the Federal Trade Commission has approached both sides as a precautionary measure ahead of any deal. Combined, the companies have more than 14,000 US locations, many of them selling petrol, according to Opis, an energy market information service.
In its rejection, Seven & i also highlighted the need for deeper discussion of the central role that its 22,800 convenience stores play in Japan, where they are considered part of the social infrastructure needed to provide supplies and basic services in the event of an earthquake or other natural disaster.
Seven & i’s share price is hovering at about ¥2,120 ($14.87) a share, giving it a market capitalisation close to the Couche-Tard offer and well above where the stock was trading before the takeover approach became public in August.
“We are disappointed in 7 & i’s refusal to engage in friendly discussions,” Couche-Tard said this week. “We are highly confident that collaborative discussions would lead to our ability to find increased value for 7 & i shareholders.”
The Canadian company also played down Seven & i’s regulatory concerns, saying the highly fragmented US convenience store market would make it possible for the two companies to manage competition issues by divesting some sites. It also committed to “continuing to serve” an important role in Japan’s emergency response.
Nomura, Seven & i and Couche-Tard declined to comment.
