Japanese retail giant Seven & i Holdings, owner of 7-Eleven convenience stores, is reportedly trying to appeal to the Japanese government to defend itself against a takeover bid by Quebec giant Alimentation Couche-Tard, several media outlets have reported.
• Also read: Couche-Tard wants to buy 7-Eleven convenience stores
• Also read: Couche-Tard wants to buy 7-Eleven and become world number 1
The Japanese group, whose shares jumped on the announcement on August 19 of this offer for an unspecified amount, then explained that it had set up a group composed of independent directors within its management committee to study it.
But according to information from the Bloomberg agency, Seven & i is seeking to obtain from the Japanese Ministry of Finance a protected status granted in particular to companies present in sensitive sectors such as nuclear power or semiconductors.
Anyone wishing to acquire more than 10% of the shares of a company under this status must obtain prior approval from the Japanese government.
The acquisition, if successful, would potentially be the largest of a Japanese company by a foreign group in several years.
It would create a distribution giant, with the 85,000 stores owned in 19 countries by Seven & i, operator of 7-Eleven convenience stores, and the 16,700 stores in 31 countries owned by Couche-Tard, including the Circle K brand.
“Seven & i appeared to be doing the right thing, relying on a special committee” in line with recent directives from Tokyo to seriously consider such offers in the name of better corporate governance, one shareholder was quoted as saying by the Financial Times, speaking anonymously.
“But if behind the scenes they are already talking about defensive tactics, that suggests that whatever the special committee decides (they) are not approaching the matter with the best interests of shareholders in mind,” the source added.
Asked by AFP, the Japanese group refused to comment.
Seven & i dropped 1.03% on Wednesday on the Tokyo Stock Exchange following this news. At the close, its market capitalization was around 5,470 billion yen (34 billion euros).
“It is clear that Seven & i wants to put up an obstacle” to this acquisition, but even if protected status were granted, “it would not be an assurance that the transaction would be blocked. Many agreements have been concluded” in this context, Travis Lundy of Quiddity Advisors, who publishes on the Smartkarma platform, reminds AFP.
According to him, this apparent reluctance of the Japanese supermarket giant does not mean the failure of the takeover bid for Couche-Tard.
The Canadian group “can file a claim and spend tons of money on legal fees to argue its case. Ultimately, it’s the (Japanese) government that will decide,” Lundy said.
A forced takeover is unlikely, he said, because “hostile takeovers of large, customer-facing companies are very, very rare globally. It is better for Couche-Tard to use shareholder interest as a tool of persuasion.”
