TOKYO (Reuters) – Shares in Japan's Seven & i Holdings fell 8% in morning trade on Tuesday, giving up some of the previous day's gains, on news that Canada's Alimentation Couche-Tard is seeking a takeover.
Although the value of the offer was not disclosed, it would make the owner of 7-Eleven Japan's biggest ever foreign acquisition target. Couche-Tard owns Circle-K stores.
Seven & i said it had established a committee made up of only independent directors to review Couche-Tard's proposal to buy all of the company's outstanding shares.
The Canadian company confirmed that a “friendly proposal” had been sent to Seven & i, adding that it was focused on reaching a mutual agreement.
“Couche-Tard tried to take over Carrefour (EPA:) so they wanted a big acquisition so to see a deal like this being proposed is not shocking,” said Cole Smead, CEO of Smead Capital Management, which owns shares in the Canadian company.
“Couche-Tard can significantly increase the margin and profitability of existing Seven and Speedway and 7 Eleven locations,” he said, adding “they have a history of acquiring assets and improving margins across the business.”
Jefferies said in a research note that Seven & i's decision to set up an independent committee is a good one. But it added that “constraints remain on the scale of transactions and issues of trust”.
On Monday, news of the deal sent Seven shares up nearly 23% in Tokyo, valuing the retailer at about 5.6 billion yen ($38 billion).
Couche-Tard is worth an estimated $58 billion.
($1 = 146.2800 yen)
