Stock in Tokyo’s Seven & I Holdings, the company that operates the convenience store chain 7-Eleven, rose sharply on Wednesday because of a new acquisition bid by Canadian peer Alimentation Couche-Tard. The latest plan is said to be about 20% more than Couche-Tard’s previous bid figures suggesting a keen interest in owning the world’s largest convenience store chain.
Details of the Buyout Offer
Seven & I Holdings Co of Japan had earlier announced the new approach to buy the remaining shares in the company but did not release further details on the offer. According to Bloomberg News, the new bid gives Seven & I more than $ 47 billion (£ 36 billion) against $ 38 billion of the rejected bid. This rejection was based on the idea that the earlier bid of the Couche-Tard under-valued the chain and secondly, a foreign takeover faced many regulatory issues.
After the announcement, the company’s share at Seven & I was up by 4.7% in Tokyo after an earlier increase of 9.5%. According to the details, the new proposal was filed with Seven & I on September 19 which shows there have been no meetings between the two firms since then.
Seven & I Holdings said it ‘‘will continue to act in the best interest of its shareholders and other stakeholders’’. When the company declined the previous offer, Japan’s Finance Ministry blacklist it identifying the firms as ‘core’ entities where the security of the nation is at risk. This designation makes it compulsory for any foreign investor who wishes to invest in such firms to first subject him or herself to government scrutiny, a move which is unlikely to have a very negative impact on Couche-Tard’s acquisition bid.
To date, the trend has been that large Japanese firms are usually on the buying side, that is they purchase other firms from other countries. In an endeavor to cover up with changing market structure last year, the Japanese government floated new guidelines to give a second thought to credible takeover bids.
7-Eleven currently stands as the worldwide convenience stores’ market leader with roughly 85 085,000res in 20 countries and territories. If this deal with Couche-Tard goes through it could extend Couche-Tard’s store base to more than a hundred thousand outlets in the U S and Canada alone giving it more than 20000 stores across the two nations.
For more on convenience store mergers and their effects on client purchasing behavior, read this paper on the effects of retail mergers that provides insights into how such actions are likely to alter marketplace behavior.
