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The parent company of 7-Eleven, Tokyo-based Seven & i Holdings, has rejected a nearly $40 billion buyout proposal from Canadian convenience store operator Alimentation Couche-Tard Inc., citing concerns over valuation and regulatory hurdles. In a letter issued Friday, Seven & i board chair Stephen Dacus stated that the nonbinding offer undervalued the company and failed to address the significant regulatory challenges the deal would face.

7-eleven $40b buyout offer rejection : Offer Details and Rejection

Couche-Tard's proposal, valued at approximately $38.6 billion, aimed to acquire all outstanding shares of Seven & i for $14.86 per share in cash. The Japanese company's board conducted a "careful and comprehensive review" before unanimously deciding to reject the offer.

Dacus, in a letter addressed to Couche-Tard’s board chair Alain Bouchard, emphasized the importance of safeguarding the company’s "intrinsic value" and addressing the substantial regulatory risks posed by the transaction. "We will resist any proposal that deprives our shareholders of the company’s intrinsic value or that fails to specifically address very real regulatory concerns," he wrote.

7-eleven $40b buyout offer rejection : Regulatory and Valuation Concerns

The rejection also highlighted the anticipated scrutiny from U.S. antitrust regulators, especially given the current administration’s tough stance on competition law enforcement. Dacus alluded to these challenges in his letter, pointing out that the bid "provides no certainty to closing." He specifically referenced the Biden administration's heightened antitrust policies, which have made large acquisitions more challenging to complete.

While the offer acknowledged the significant role Seven & i plays in Japan’s daily life, spanning food retail, banking, and other services, Dacus stated that more discussions would be necessary if negotiations progressed.

Potential for Future Discussions

Despite rejecting the initial offer, Dacus left the door open for Couche-Tard to return with a revised proposal. He encouraged the Canadian firm to submit an offer that fully recognized the company's standalone value and adequately addressed regulatory concerns.

The bid, he noted, was "opportunistically timed and grossly undervalues" Seven & i’s assets and future growth potential. He also underscored the importance of ensuring any new offer provides certainty regarding regulatory approvals in the U.S. and other jurisdictions.

Next Steps

Seven & i had previously acknowledged the buyout proposal in an August 15 letter to Couche-Tard, shortly before publicly disclosing the offer. As of Friday, Couche-Tard had not responded to the rejection.