Japan's Seven-Eleven Rejects Acquisition Proposal from Canadian Company

Canadian Company Undervalued

Seven & I Holdings, the operator of convenience store chain Seven-Eleven, has rejected an acquisition proposal from Canadian retailer ACT.

According to major foreign media on the 6th, Seven & I Holdings stated in a recent letter to ACT that “the valuation of our company (as assessed by your company) was underestimated” and “following the board's recommendation, we have concluded that the proposal is not in the best interest of our shareholders.”

Earlier, ACT announced last month that it intended to purchase all outstanding shares of Seven & I Holdings at $14.86 per share (approximately 2,100 yen). The proposed acquisition amount was between 5.5 trillion and 6 trillion yen (approximately 51 trillion to 56 trillion won), which is similar to or exceeds Seven & I Holdings’ recent market capitalization of 5.6 trillion yen.

ACT, the parent company of convenience store chain Circle K, is Canada’s largest convenience store operator, running over 16,000 stores worldwide, mainly in North America and Europe. Seven & I Holdings, which shares a history with convenience stores, operates about 85,000 stores under the Seven-Eleven brand across the United States, Asia, and other regions.

If this merger had been successful, it would have been the largest acquisition of a Japanese company by a foreign firm and would have created the world’s largest retail company.

The New York Times (NYT) evaluated that the failure of ACT’s merger with Seven & I Holdings was foreseeable. Given the potential market disruption from the creation of a giant retail company, the deal would have faced stringent antitrust reviews by U.S. regulatory authorities. Moreover, considering the significant symbolic value of Seven-Eleven in Japan, it is unlikely that Japanese political circles would welcome a domestic company being sold to a foreign entity, and the Japanese government, known as the originator of corporate value-up policies, would likely oppose it as well.

Since Seven & I Holdings stated that the acquisition price proposed by ACT undervalued their company’s fair value, they are expected to face pressure from investors to increase corporate value. Amid evaluations that the growth potential of the convenience store business has recently slowed even in Japan, known as the ‘convenience store paradise,’ this is anticipated to become a new challenge for Seven & I Holdings.