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Alimentation Couche-Tard has told Japan’s Seven & i Holdings it is willing to pay close to $47bn to take over the convenience store giant, 20 per cent more than its previously rejected bid.
The non-binding offer by the Canadian company was sent to the Tokyo-based owner of the 7-Eleven chain last month and no material negotiations have taken place since, according to people familiar with the matter.
Seven & i shares initially surged more than 10 per cent on the news, which was first reported by Bloomberg, on Wednesday before paring gains to trade up 4 per cent by mid-morning in Tokyo.
Seven & i declined to comment. A representative for Couche-Tard did not respond to a request for comment.
The Japanese group received and rejected an almost $39bn opening offer from Couche-Tard in September, saying it “grossly undervalues” the business and does not account for the difficulty of getting a deal past competition regulators in the US.
Last month the US Federal Trade Commission told lawyers for the two companies to retain documents linked with the potential merger of their petrol station and convenience store chains.
The combination of Couche-Tard, operator of the Circle K brand, and Seven & i would create one of the largest retail chains in the US.
One person familiar with Seven & i’s thinking said the group was focused on second-quarter results, due to be announced on Thursday, and proving to shareholders it could deliver sufficient value as a standalone entity.
The group has been exploring selling non-core assets to private equity and other investors, while accelerating plans to focus on its convenience store business.
Alongside other plans, the company is considering accelerating the sale of its stake in its financial services arm, Seven Bank, as well as selling its supermarket business.
If accepted, Couche-Tard’s takeover bid would be the largest in Japan by a foreign company and follows years of stop-start progress on corporate governance reform in the country, which has put boards under greater pressure to prioritise shareholders’ interests.
One investor, whose fund holds a substantial stake in Seven & i, said if the company continued to resist Couche-Tard the pressure would now be on the Japanese company.
“It will need to explain why it is rejecting an offer given that the overall valuation has not risen that much since the summer, and the board’s special committee will need to be clearer on what level of price or what conditions would be required for serious negotiations to begin,” said the person who did not wish to be named.
