Seven & i turns down Couche-Tard’s $38.5 billion takeover bid

Investing.com — The board of 7-Eleven owner Seven & i Holdings (TYO:3382) has rejected a $38.5 billion cash bid from Canada’s Alimentation Couche Tard (TSX:ATD), arguing in a letter made public on Friday that the offer was not in the best interest of its shareholders.

Seven & i added that Couche-Tard’s $14.86 per share cash proposal, which would be the biggest-ever foreign buyout of a Japanese firm, was “opportunistically timed” and would likely face stiff antitrust hurdles in the US. The combined company would be the largest player in the the US convenience store industry.

“[W]e do not believe, for several critical reasons, that the proposal you have put forward provides a basis for us to engage in substantive discussions regarding a potential transaction,” the firm said in the letter, which was sent by the Stephen Dacus, the chair of a special committee set up by Seven & i to review Couche-Tard’s offer.

In August, Seven & i revealed that it had received an unsolicited, confidential proposal from Couche-Tard. The Canadian group said that its offer was friendly and non-binding. At the time, news of the bid sent shares in Seven & i spiking by almost 23%.

Seven & i said it was open to “sincerely consider” any proposals, but noted that it would “resist” any plan that “deprives our shareholders of the company’s intrinsic value that fails to specifically address very real regulatory concerns.”

Alex Miller, the incoming Chief Executive Officer of Circle-K owner Couche-Tard, said in a post-earnings call on Thursday that the company would be able to finance and finalize the deal, according to Reuters.

The offer comes as foreign interest in acquiring Japanese companies has been on the rise due in large part to overhauls in the country’s corporate governance laws, as well as a cheaper yen and low interest rates.

Reuters contributed to this report.