7-Eleven owner snubs $39bn bid, taps Nomura for takeover advice – what’s next?

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Seven & i Holdings has initiated a strategic move by enlisting Japan’s largest investment bank to guide its board in anticipation of a potential showdown with Alimentation Couche-Tard from Canada. Despite the rejection of Couche-Tard’s initial bid of $39 billion for the 7-Eleven proprietor, Seven & i has recently appointed Nomura as an advisor to its special committee of independent directors to scrutinize the takeover proposal. The plot thickens as Couche-Tard insists on pursuing the acquisition, expressing readiness for “collaborative and amicable negotiations” to seal the deal.

Here’s a breakdown of the key points surrounding this unfolding saga:

• A merger between Couche-Tard, the operator of Circle K outlets, and Seven & i would birth one of the largest retail giants in the United States, marking the most substantial takeover of a Japanese firm by a foreign entity.
• The opening bid of $14.86 per share in cash, amounting to an approximate enterprise value of $60 billion for Seven & i, was promptly rebuffed by the Japanese company, citing a severe undervaluation.
• Regulatory hurdles loom as the Federal Trade Commission in the US has chimed in on potential competition concerns, considering the vast presence of over 14,000 locations between the two conglomerates, particularly in the gasoline retail sector.
• Seven & i underscored the critical role played by its 22,800 convenience stores in Japan, highlighting their significance in the country’s disaster preparedness infrastructure.

As tensions escalate and negotiations reach an impasse, Couche-Tard expresses disappointment over Seven & i’s reluctance to engage in productive dialogues, emphasizing the potential value escalation for Seven & i shareholders. The Canadian behemoth remains optimistic about addressing regulatory apprehensions in the US market by divesting certain assets and ensuring continued support for emergency response efforts in Japan.

Ultimately, the unfolding narrative of Seven & i’s standoff with Couche-Tard underscores the intricate dance of power and strategy at play in the world of business acquisitions and mergers. As the stakes heighten and the drama unfolds, only time will reveal the fate of this high-stakes corporate tussle. Stay tuned for more updates as the plot thickens.