Convenience store operator 7-Eleven will inform Couche-Tard that its purchase offer is priced inadequately and its proposal needs to be revised, the Asian financial daily reported Thursday. Nikkei.
Still according to Nikkeithe board of directors of Seven & i decided on Thursday to send a letter to Couche-Tard on Friday in which the Laval company will be asked to review its offer, in particular the price offered.
Japanese group Seven & i had indicated on August 19 that it had received a proposal from Couche-Tard to acquire all of its outstanding shares and had set up a special committee to evaluate Couche-Tard’s proposal. The terms of the proposal were never specified.
Seven & i is the leading convenience store operator in the United States with an estimated market share of nearly 10%. The company, valued at approximately CAD$50 billion, also holds a leading share of convenience stores in Japan. Seven & i’s network totals more than 85,000 stores.
During a conference call with analysts Thursday morning, Couche-Tard’s chief operating officer and CEO designate, Alex Miller, said he has deep respect for Seven & i.
More specifically, he said he saw in Seven & i an opportunity to “grow together”, improve the offering for customers and deliver a convincing result for shareholders, employees and key groups of both companies.
“We are confident in our ability to finance and complete this merger and we look forward to discussing with Seven & i in a constructive manner,” he added before commenting on the financial performance at the start of the financial year revealed at the end of the day on Wednesday.
Couche-Tard’s profits declined in May, June and July. Management argues that the caution of American consumers in the current economic context, particularly those with low incomes, may help explain the decline in profitability and the decline in comparable store merchandise sales in the United States.
PHOTO RYAN REMIORZ, CANADIAN PRESS ARCHIVES
Couche-Tard’s profits declined during the months of May, June and July.
National Bank Financial analyst Vishal Shreedhar believes that continued weakness in merchandise sales will lead some observers to increasingly question the ambitious five-year “10 to Win” strategic plan presented by Couche-Tard last October.
“This may also explain why Couche-Tard is aggressively pursuing acquisitions, contrary to its announced strategy. Acquisitions were presented as a minority part of the growth plan,” he emphasizes in a note sent to his clients.
Couche-Tard revealed last fall that it was aiming to reach US$10 billion in profits before taxes, interest and depreciation by fiscal 2028 by leveraging its “10 to Win” strategic plan.
“We didn’t expect it to be a great quarter, and it wasn’t,” commented TD analyst Michael Van Aelst.
“Investors are more focused on the takeover bid for Seven & i and the potential for a share issue to finance the transaction,” he adds.