The operator of 7-Eleven convenience stores was quick to respond on Monday to Alimentation Couche-Tard’s invitation to continue discussions surrounding its acquisition project.
In a statement released Sunday evening, management of the Laval company said it was “very confident” that collaborative discussions would result in increased value for Seven & i shareholders.
“We remain prepared to engage in collaborative and friendly discussions with Seven & i to focus our efforts on seeking greater value for Seven & i and its shareholders and providing regulatory certainty,” Couche-Tard said.
Seven & I quickly reiterated its position Monday morning. “We do not believe that the proposal presented by Couche-Tard allows us to enter into substantive discussions on a potential transaction,” read a message published Monday.
“This is precisely why we did not ask our advisors to enter into further discussions or sign a confidentiality agreement,” Seven & i adds.
The Japanese group’s management nevertheless says it remains “open” to the idea of engaging in “sincere” discussions if Couche-Tard presents a proposal that fully recognizes the intrinsic value of Seven & i and addresses its concerns.
Seven & i had rejected a Couche-Tard proposal on Friday, saying the offer undervalues its potential and does not adequately recognize the “multiple and significant” challenges such a transaction would face. Based on the offer price of US$14.86 per share first revealed on Friday, the proposed transaction would be worth more than C$50 billion.
Couche-Tard management says it is convinced that there are solutions to meet regulatory requirements in the United States and Japan.
As Seven & i and Couche-Tard have already done in the context of successful acquisitions, we would review, jointly with Seven & i, the divestitures that may be necessary to obtain regulatory approvals.
Couche-Tard in a press release
“In Japan, we believe that with Seven & i, we would offer a compelling combination that would address all regulatory considerations and recognize the importance of Seven & i in Japan, particularly in food supply, banking and security services,” it said.
Couche-Tard also indicates that the transaction is not subject to financing conditions, as management is very confident in its ability to organize the financial structure of the operation.
“We have well-established relationships with major financial institutions and investors who are prepared to support us in this transaction. We have obtained a letter from our advisor indicating that he is very confident that he will be able to arrange the financing for the proposed transaction.”
Desjardins Securities analyst Chris Li believes Couche-Tard’s response should pave the way for further negotiations.
Chris Li points out that Couche-Tard has demonstrated in the past its willingness to improve its offers as soon as it has access to information allowing it to establish a higher price.
The expert added that the tone of Couche-Tard’s response suggests that Couche-Tard will want to keep Seven & i’s convenience stores in Japan.