Alimentation Couche-Tard says it is “disappointed” by the refusal of its purchase offer by the Japanese owner of 7-Eleven, but remains determined to reach an agreement.
In a press release published Sunday, the Quebec convenience store giant argued that its proposal offers clear strategic and financial advantages and believes that the two companies can conclude a mutually acceptable transaction.
In its own statement released Monday, Seven&i Holdings said it was prepared to continue discussions if Couche-Tard files a proposal that “fully recognizes the intrinsic value of Seven&i” and addresses its regulatory concerns.
On Friday, Seven&i said Couche-Tard’s takeover bid “grossly undervalues” the Japanese company and that the proposal was not in the best interests of its shareholders and other stakeholders.
Seven&i had called the $14.86 per share offer “opportunistic” and raised concerns about regulatory approval of the deal.
Alimentation Couche-Tard is hopeful that further discussions will result in increased values for Seven&i shareholders.
“Given the mutual benefits of a combination, we are disappointed by Seven&i’s refusal to engage in friendly discussions. We are very confident that collaborative discussions would allow us to find increased value for Seven&i shareholders,” the Quebec company said in its press release.
She added that she offered to enter into a non-disclosure agreement to allow both sides to share additional information, but was refused.
Couche-Tard assured in its press release that it would work jointly with Seven&i to obtain regulatory authorizations.
“Couche-Tard has a track record and a successful track record of acquisitions and working with U.S. and other regulatory authorities in full compliance with applicable processes and requirements,” the company said.
Analysts, however, doubt the two companies’ ability to reach an agreement, as they believe satisfying Japanese regulators will be difficult and could force Couche-Tard to abandon some of its assets.
“Although reforms have been put in place in the country to facilitate takeovers, most Japanese companies are very cautious and reluctant to change. This includes Seven&i, whose complex operating model also hampers the completion of a deal,” said Neil Saunders, managing director of GlobalData, in an email in late August.
“Unless Couche-Tard offers a substantial premium, (the transaction) risks being ruled out,” he added.
Seven&i not only owns the popular 7-Eleven convenience store chain in the United States, Japan and elsewhere, but also a number of other businesses including supermarkets, food producers, household goods retailers, financial services companies and even has a stake in Tower Records Japan.
Couche-Tard’s network already covers 31 countries and more than 16,700 stores. Seven&i’s website states that the Japanese company operates approximately 85,800 stores, has approximately 157,177 employees and receives 63.6 million customer visits per day.
In the United States alone, 7-Eleven’s 14.5% market share makes it the largest convenience store operator in the country, while Couche-Tard’s banners make up about 4.6% of the market.