Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Canada’s Alimentation Couche-Tard has withdrawn its record-breaking $46bn proposal to acquire Japan’s Seven & i Holdings, bringing an end to its year-long campaign to pull the 7-Eleven owner to the negotiating table on friendly terms.
Couche-Tard, which owns the Circle K chain, on Thursday said a lack of “constructive engagement” by Seven & i led to its decision to withdraw the unsolicited takeover proposal that would have resulted in the largest deal for a Japanese company by a foreign group.
Couche-Tard said in a letter to Seven & i’s board: “There has been no sincere or constructive engagement from 7&i that would facilitate the advancement of any proposal.”
It added: “You have engaged in a calculated campaign of obfuscation and delay, to the great detriment of 7&i and its shareholders.”
Brokers speaking ahead of Thursday’s market open in Tokyo said shares in 7&i were likely to be heavily sold. The surprise 2024 bid by the Canadian group, which placed a hefty 48 per cent premium on the pre-bid value of the target company, had drawn large numbers of event-driven hedge fund investors to hold the stock.
A Tokyo-based broker said: “I think we are going to see some disappointment and pretty heavy rotation out of this stock today from the hedge funds. Some may guess there is a chance that Couche-Tard comes back with a hostile bid, but I’m not sure how much conviction there will be behind that.”
The fact that the bid emerged at all was widely interpreted as evidence that Japan was finally opening up to the possibility large-scale takeovers, after decades of strong resistance.
Several of 7&i’s largest shareholders have said the various stages of the deal represented litmus tests for Japan’s wider progress on corporate governance reform, transparency and attention to shareholder interests.
The two sides had agreed to work on a solution to concerns from competition authorities that would have involved selling 2,000 stores in the US where their store footprint significantly overlapped.
The Canadian group’s approach triggered the Japanese retail giant to overhaul management and vastly transform its portfolio by selling a stake in domestic general merchandise stores and drawing up plans to list its US arm.
Seven & i’s founding Ito family had attempted to muster a $58bn management buyout with the support of trading house Itochu as a white knight alternative to Couche-Tard that would have kept the retailer under Japanese ownership. But this attempt was dropped in February because of challenges in raising the funds.
In the letter, Couche-Tard revealed it had proposed an alternative structure under which it would acquire the entirety of Seven & i outside of Japan and 40 per cent of the Japanese operations.
