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Reuters
18-07-2025
- Business
- Reuters
Japan provides reality check for Couche-Tard's grand retail dream
TOKYO, July 18 (Reuters) - Alimentation Couche-Tard's ( opens new tab attempt to create a global convenience store behemoth was set back when it pulled its $46 billion bid for Seven & i (3382.T), opens new tab, whose consumers in Japan have emotional ties to their purveyor of rice balls. The Canadian company, which owns Circle-K, withdrew its bid on Thursday after a year-long pursuit, citing "a calculated campaign of obfuscation and delay" by the Seven-Eleven operator and lack of engagement by its founding Ito family. Couche-Tard first disclosed the proposal in August last year, with Seven & i under pressure from shareholders to boost returns by selling off assets and focusing on its mainstay convenience store business. "ACT bid at just the right time... when Seven was at its weakest," said Michael Causton of consultancy JapanConsuming. The possibility of a takeover quickly sparked concern about whether the Seven-Eleven operator's fresh food would be affected. It also generated debate about Japan's openness to foreign takeovers. Convenience stores are an important resource in Japan during natural disasters, but Seven-Eleven's massive global presence made it a target for Couche-Tard. With Seven & i looking to avoid a takeover, it changed its self-reported national security category to "core" in September, a step which raised questions as to whether it was a defensive manoeuvre. In private, it emphasised its importance to Japan's economic security to the government, three sources familiar with the matter said. Seven & i declined to comment. The Canadian company hiked its proposal price in October, with Seven & i revealing plans to hive off assets the same month. The Japanese firm also announced plans to list its North America business. "It has sparked the management into being more proactive," said Lorraine Tan, an analyst at Morningstar. The company had expressed concerns about the regulatory hurdles to a deal. "Couche-Tard seemed to want to iron out the details after Seven & i had agreed to the deal," said Travis Lundy, an analyst who publishes on Smartkarma. Couche-Tard's approach appeared to gain a tailwind when an attempt by the Ito founding family to buy Seven & i collapsed in February after failing to secure funding. Then, after initially providing little public explanation for pursuing the deal, Couche-Tard in March made a publicity push for the combination emphasising its financial credentials. However, the Canadian retailer faced growing challenges including lacklustre retail spending in the U.S., with its stock price sliding between the end of last year and Wednesday's close. "Couche-Tard may have realised that the cost cannot justify the risks, including prolonged negotiations and uncertain business prospects," said Tatsunori Kawai, chief strategist at Mitsubishi UFJ eSmart Securities. Its shares jumped 8% on Thursday after withdrawing the bid. "To continue further... would ultimately be a lost opportunity for its own growth," said Takahiro Kazahaya, an analyst at UBS. Analysts are also questioning how Seven & i, famed for its ready meals, will drive further growth. On Thursday, Natsuko Douglas, an analyst at Macquarie Capital, downgraded Seven & i to neutral from outperform, citing unclear benefits from the planned listing of the North America business. "Full recovery is a long time away," she wrote in a note. The planned listing is "something they probably don't want to do but were prepared to do to get rid of Couche-Tard," said Tom Leske, director at Churchill Capital. Industry experts point to Seven & i's strengths, honed over decades in Japan's bruising retail market, which has proved tough for many foreign entrants. "Seven globally will be giving competitors a hard time once it has its ducks in a row," said JapanConsuming's Causton.
Japan Times
18-07-2025
- Business
- Japan Times
Couche-Tard's failed bid for Seven & I sparks debate over foreign acquisitions
Alimentation Couche-Tard's decision to walk away in frustration from an attempted acquisition of Seven & I Holdings set off a debate in Tokyo as to what lessons foreign companies with ambitions for mergers and acquisitions should draw. The bid was audacious from the start. 7-Eleven convenience stores operated by Seven & I have one of Japan's most recognizable brands, and a takeover would have been the largest by a foreign entity in the country's history. Moreover, the founding Ito family were so opposed to the deal that they turned to one of their archrivals to try and block it. Still, the government, which has been pushing for companies to take a more investor-friendly approach, did not raise strong political opposition, even though Seven & I had sought greater protection under a law that could have scuttled a deal. While Couche-Tard placed the blame squarely on intransigence from Seven & I's management, the failure of the deal runs counter to the broader trend in the investing landscape, according to Nicholas Smith, a strategist at CLSA. "Seven & I is just an obstructive character in an ongoing success story,' said Smith. "Activist trades and shareholder proposals are on fire. Private equity sees Japan as one of the most attractive markets in the world and is hiring aggressively. Management can't afford to relax one bit.' Stephen Dacus, the new chief executive officer of Seven & I, now has to prove that the Japanese retailer can grow and boost its efficiency on its own. The shares fell 9% on Thursday after Couche-Tard walked away from its bid. The company plans to sell its superstore business for $5.4 billion and is proposing a ¥2 trillion share buyback and a listing of its U.S. business. Seven & I's rejection of the deal is a sign of more aggressiveness in Japanese firms, according to Jesper Koll, expert director at Monex Group. "The issue is not that this is old-style Japan protectionism, quite the opposite,' said Koll. "This is actually an injection of energy and competitive spirits into a Japan-led management team that is actually very international.' The history of attempted takeovers of marquee Japanese companies by outsiders is mixed. KKR, CVC Capital Partners and Blackstone walked away from a buyout of Toshiba after meeting stiff resistance from management. Concerns about the valuation, complexity and political nature of the deal were all headwinds that eventually resulted in a consortium led by a domestic fund prevailing. Hon Hai Precision Industry, better known as Foxconn, pulled off a deal in 2016 to take a controlling stake in Japanese electronics maker Sharp for ¥389 billion. The Taiwanese electronics contract manufacturer had pursued the Japanese company for years. Foxconn founder Terry Gou had lobbied Japanese lawmakers, co-opted banks and sweetened its offer to outmaneuver a Japanese government-backed bidder. "The implications of today's news will only be understood a year from now, and will hinge on whether management succeeds in accelerating group reforms and turning around the situation in both Japan and the U.S.,' said Michael Jacobs, an investment analyst at T. Rowe Price Japan on Thursday. Unsolicited offers have quite often met strong resistance regardless of where the prospective buyers come from. Japanese motor maker Nidec made an unsolicited bid for Makino Milling Machine, shocking many Japanese companies that had never imagined they could become a takeover target by a Japanese firm. Nidec, like Couche-Tard, withdrew the bid earlier this year due to strong opposition. In another closely watched case, Taiwan's Yageo made a takeover bid for Shibaura Electronics, prompting a counter bid from Japanese rival Mineba Mitsumi. Others argued that the failure of the Couche-Tard deal had nothing to do with the nationalities or cultures of the companies involved. The issue was simply money and Couche-Tard's ¥6.77 trillion ($45.8 billion) bid simply wasn't enough. "Seven & I did what any U.S. company would do,' said Jamie Halse, CEO & CIO at Senjin Capital. "It was up to Couche-Tard to put in a knockout offer.'
Reuters
17-07-2025
- Business
- Reuters
Couche-Tard scraps $46 billion bid for Japan's Seven & i
TOKYO, July 17 (Reuters) - Canada's Alimentation Couche-Tard ( opens new tab on Thursday pulled its $46 billion bid to buy Seven & i Holdings (3382.T), opens new tab, saying the retailer refused to engage constructively on the deal, which would have been Japan's largest ever foreign buyout. Couche-Tard, which operates Circle K, spent a year trying to create a global convenience store giant by acquiring the company behind 7-Eleven. The deal is the largest ever proposed corporate buyout to fall apart in the Asia Pacific region, according to Dealogic data. Seven & i shares closed down 9% at 2007.5 yen, 23% below the 2600 yen offer price, while shares of Canada's Couche-Tard surged 17% to C$80.23 in early trading. "There has been no sincere or constructive engagement from 7&i that would facilitate the advancement of any proposal, contrary to comments made publicly by 7&i representatives," Couche-Tard said in a letter to the Japanese company's board of directors. "Rather, you have engaged in a calculated campaign of obfuscation and delay, to the great detriment of 7&i and its shareholders," the letter said. Seven & i said in a statement that "while we are disappointed by ACT's decision, and disagree with their numerous mischaracterizations, we are not surprised." "It's a ceasefire for now," said independent retail analyst Akihito Nakai. If Seven & i lists its North American business, that could be targeted by Couche-Tard, he said, adding, if it does not do so, Seven & i could again face a bid for the whole company. Couche-Tard said their commitment to not pursuing a hostile takeover remains. "The deal was always a long shot... For Couche-Tard, it's back to business as usual and we expect the company to remain highly active in the M&A market, particularly as the U.S. convenience store sector remains both mature and fragmented, making it ripe for consolidation," said Arun Sundaram, analyst with CFRA Research. Seven & i is widely seen as a test case for corporate Japan's openness to foreign takeovers. The withdrawal came after Nippon Steel (5401.T), opens new tab was able to acquire U.S. Steel in a contentious $14.9 billion transaction. "We are very disappointed in what appears to be a lack of willingness to engage from Seven & i," said Manoj Jain, co-founder and co-CIO of Hong Kong-based Maso Capital, a Seven & i shareholder. "We believe there is significant value to be realised in a combination and have expressed this view to the management and the board." Seven & i, whose first foreign CEO Stephen Dacus took the role in May, has been under intense pressure to improve its lacklustre earnings and demonstrate it can grow independently. "We remain fully committed to our standalone value creation plan, which we have been pursuing in parallel," said Seven & i. Seven & i's board is likely to face shareholder pressure to deliver that strategy as a standalone corporate entity. Some activist investors had urged the company to engage with its foreign buyer. "No doubt minority investors are disappointed but the test will be to see what avenues they have to engage with the Seven & i board and management in the future on this issue," Lorraine Tan, Director of Equity Research, Asia at Morningstar. "I am quite skeptical that things will change. But my view is that at least on the positive side, it has sparked the management into being more proactive with a plan to boost shareholder value." Couche-Tard raised its offer to about $47 billion in October and in March offered to increase it further if the Japanese firm cooperated and revealed more financial information. Based on Couche-Tard's 2,600 yen per share offer price and the current exchange rate, the deal was valued at $46 billion. The Canadian retailer was also working with Seven & i on a store sale plan, in a bid to ease some regulatory hurdles. Its approach appeared to be gathering steam after a white-knight bid from Seven & i's founding Ito family ended after failing to get financing. Couche-Tard said it had sought to speak to the family but found them unwilling to engage. The two companies inked a non-disclosure agreement (NDA) but "the quantity and substance of the permitted due diligence, including at two tightly constrained management meetings, have been negligible," Couche-Tard said in the letter. Couche-Tard said it believed a full combination of the two companies would maximise value for shareholders but had also explored alternatives. The retailer said it had proposed acquiring all of 7&i's business outside of Japan and 40% of the business in Japan, where convenience stores are seen as key infrastructure due to their support role during natural disasters. "We are not able to effectively pursue this combination without deeper and genuine further engagement from 7&i leadership and the special committee," the letter said. Seven & i proposed selling its international business to Couche-Tard in return for a stake in the Canadian retailer, the letter said. Such a deal "would not deliver the significant premium that was offered to your shareholders in our transaction proposals," the letter said.
CBC
17-07-2025
- Business
- CBC
Quebec-based Couche-Tard pulls out of bid for 7-Eleven parent company
Alimentation Couche-Tard has backed away from a bid to buy the parent company of Japanese convenience store giant 7-Eleven. Couche-Tard says it withdrew its proposal to buy Seven & i Holdings Co., Ltd., which it accused of failing to sincerely and constructively engage with its offer. Couche-Tard says it repeatedly sought a friendly dialogue with Seven & i's founding family but alleges it was not open to any conversation and management hasn't been willing to address basic questions about industry dynamics in the country. Couche-Tard, the Quebec-based firm which owns Circle K and Ingo, first made a friendly offer for Seven & i last August. It improved the bid that fall before issuing a non-binding proposal earlier this year. Seven & i initially rebuffed the takeover, saying it would be too hard to nab regulatory approvals because some would see the deal as reducing competition across several markets. But after Seven & i's founding family failed to secure financing for what could have been a competing bid, Couche-Tard and the Japanese firm entered more serious discussions earlier this year about a potential path forward.
Forbes
17-07-2025
- Business
- Forbes
Couche-Tard Drops $46 Billion Bid To Buy 7-Eleven Owner Seven & I
Couche-Tard's withdrawal of its takeover bid for Seven & i marks the end of what could have been the biggest foreign acquisition of a Japanese company. Kiyoshi Ota/Bloomberg Alimentation Couche-Tard, the Canadian operator of Circle K convenience stores, has dropped its $46 billion bid to acquire Seven & i Holdings, citing the Japanese owner of the 7-Eleven chain's 'lack of constructive engagement' throughout a yearlong negotiation. In a 1,500-word letter to Seven & i's board on Wednesday, Couche-Tard said the Japanese retailer was uncooperative in meetings and did not provide enough information to move the deal forward. 'There has been no sincere or constructive engagement from 7&i that would facilitate the advancement of any proposal, contrary to comments made publicly by 7&i representatives,' Couche-Tard said in the letter. 'The quantity and substance of the permitted due diligence, including at two tightly constrained management meetings, have been negligible,' it added. 'Rather, you have engaged in a calculated campaign of obfuscation and delay, to the great detriment of 7&i and its shareholders.' In response, Seven & i said on Thursday that while it's disappointed by Couche-Tard's decision and disagreed with the Canadian rival's 'numerous mischaracterizations,' it wasn't surprised. Seven & i added that it had 'consistently engaged in good faith and constructively' with Couche-Tard to explore the possibility of reaching a deal that would benefit its shareholders. Shares of Seven & i fell more than 9% on Thursday to ¥2,007.5, which is 23% below Couche-Tard's offering price of ¥2,600. Couche-Tard's withdrawal brings to an end of what could have been the biggest-ever foreign takeover of a Japanese company to create one of the world's largest retail groups by store count. It could dampen foreign investors' optimism about Japan's shift away from protectionist practices, despite the country's ongoing corporate governance reforms aimed at improving shareholder returns. Last August, Couche-Tard offered to acquire Seven & i for $39 billion, and raised the bid to $46 billion in less than two months after the Japanese retail giant rejected the proposal. Then in November 2024, Junro Ito, part of Seven & i's billionaire founding family, proposed a $58 billion management buyout, only to pull back in February after failing to secure financing. Since then, Couche-Tard and Seven & i had been in discussion to divest stores in the U.S. to address antitrust concerns. At the same time, the Japanese retail giant announced a sweeping business restructuring plan to fend off the takeover bid. The overhaul includes the divestment of its underperforming supermarket unit, a potential listing of its U.S. business and a ¥2 trillion share buyback through fiscal year 2030. In the letter to Seven & i on Wednesday, Couche-Tard said the Japanese retailer didn't provide sufficient information about commercial due diligence needed for the deal. It also said its meetings with Seven & i were a 'readout' and 'tightly scripted.' In one meeting, a 7-Eleven executive attempted to address one of Couche-Tard's questions, but was interrupted and rebuked by Seven & i chief executive Stephen Dacus, who 'pointed to his head as if to remind his colleague to 'think',' said Couche-Tard in the letter. The two companies also couldn't reach an agreement on the deal structure. Couche-Tard said it had at one point proposed to acquire all of Seven & i's business outside of Japan and 40% of the business in Japan, leaving 60% of the latter to Seven & i. In turn, Seven & i proposed selling its U.S. business to Couche-Tard in exchange for equity ownership. Couche-Tard, however, said such a deal 'would not deliver the significant premium that was offered to your shareholders in our transaction proposals and, in our view, would undermine the operational prospects of the combined business.' Seven & i said in its letter that it had 'pursued all parallel paths to ensure that value for shareholders and other stakeholders is maximized' throughout the negotiation. MORE FROM FORBES Forbes Seven & i To Sell Supermarket Unit To Bain For $5.4 Billion And IPO U.S. Arm By Zinnia Lee Forbes Japan's Billionaire Ito Family's 7-Eleven Chain Rejects $39 Billion Bid From Circle K Owner By Zinnia Lee Forbes Japan's Billionaire Ito Family's 7-Eleven Chain Gets Buyout Offer From Canadian Owner Of Circle K By Zinnia Lee
