By Rocky Swift and Ritsuko Shimizu
TOKYO (Reuters) – Japanese retail giant Seven & i will inform Canada’s Alimentation Couche-Tard that its takeover bid price is “insufficient”, a source familiar with the matter said on Thursday.
Seven & i will ask Couche-Tard to reconsider its takeover bid, also citing competition law concerns, mainly in the US, although the company is not rejecting the offer and will continue to talk to the suitor, the source said.
The company’s board will send a letter to Couche-Tard on Friday, according to the business magazine, which first reported the news.
The Nikkei said Couche-Tard offered about 6 trillion yen ($41.81 billion) when it made its proposal in July.
News of Couche-Tard’s approach to the global operator of the 7-Eleven supermarket chain, which would be the largest foreign acquisition of a Japanese company, sent Seven & i shares up almost 23% on August 19.
A spokesperson for Seven & i declined to comment. Couche-Tard’s new CEO, Alex Miller, said in a post-earnings call that the company looked forward to engaging constructively with Seven & i.
Seven & i, which has a market value of about 5.6 trillion yen ($39 billion), previously said it has formed a special committee to review the proposal, the value or terms of which were not disclosed.
Couche-Tard, which operates Circle-K convenience stores, is valued at about $52 billion.
Although Seven & i is much larger than Couche-Tard in terms of revenue, stores and employees, its shares have been underperforming for years, leading to complaints from investors including ValueAct Capital about the company’s management and asset structure.
US fund Artisan Partners (NYSE:), which holds about 0.85% of Seven & i’s outstanding shares, said last week that Couche-Tard could increase the Japanese company’s enterprise value and called on management to to respond to the offer before September 19.
The bid for Seven & i is the latest example of growing interest in Japanese companies by Western investors, attracted by the country’s push for better governance and a fall in the yen.
Foreign acquisitions of Japanese companies doubled to about 902.2 billion yen ($6.2 billion) in the first half of the year compared to the same period last year, according to LSEG data.
($1 = 143.4900 yen)
