Canada’s Alimentation Couche-Tard is one of the biggest forecourt operators in Ireland since acquiring the former Topaz chain from businessman Denis O’Brien in 2015 in a deal thought to have valued the Irish business in the region of €450m, including paying €258m in cash.
A merger with the owner of 7-Eleven would create the world’s top operator of roughly 100,000 convenience stores.
Valued at the equivalent of $31bn before news of the offer emerged, Seven & i shares jumped 23pc yesterday. The company said the bid was preliminary and non-binding, without disclosing terms.
A special committee of independent outside directors will make a “prompt, careful and comprehensive review of the proposal”, Seven & i said.
Couche-Tard confirmed it made a “friendly, non-binding proposal” but gave no details, and said it is not certain an agreement will be reached.
Although Couche-Tard is smaller than Seven & i, with about 14,000 stores compared with more than 85,000 for the Japanese retailer, the Canadian company enjoys a bigger valuation of about $58.5bn.
Foreign takeovers of Japanese companies are extremely rare, but recent changes in guidelines for merger and acquisition proposals, and activist investors pushing companies to boost value – including at Seven & i – could boost the odds of a deal that would create a global convenience-store behemoth.
“It all depends on the price, and I guess the weak yen has made it more attractive and anything north of ¥7 trillion, the management would have a tough time rejecting,” said Amir Anvarzadeh, a strategist at Asymmetric Advisors.
Shares of Seven & i posted their largest gain on record following a report on the bid. Neither offered details on the value of Couche-Tard’s offer.
Before yesterday’s jump, the stock had dropped 21pc since the end of February, making the company more attractive to a possible suitor.
Seven & i has come under pressure from activist fund ValueAct Capital Management LP over perceptions that its assets could be worth more and to narrow its focus to 7-Eleven stores, saying that as a standalone listed company the convenience-store business could be worth as much as ¥8,500 per share. Seven & i shares closed at ¥2,161 yesterday.
In reaction, it has taken restructuring measures and initiated a buyback after fending off efforts to oust CEO Ryuichi Isaka. Although headquartered in Tokyo, Seven & i gets the majority of its revenue from North America compared with 25pc from Japan.
Couche-Tard, Canada’s most valuable retailer, operates convenience stores around the world under its own brand, as well as Circle K and Ingo. It has a history of expansion overseas, and bought almost 2,200 stations in Europe from TotalEnergies SE for €3.1bn last year. It previously made a $20bn bid to buy Carrefour, which was blocked by the French government.