Japan’s finance ministry on Friday classified the parent company of retail giant 7-Eleven as a “essential” to the industrial sector, which could make a takeover by its Canadian rival Couche-Tard more difficult.
“Essential industries are those for which prior notification is required due to a significant risk of harm to national security.”the ministry explained on its website. The system of “prior notification”means that the Japanese authorities have the power to issue a suspension and desist order, including against foreign investors in certain cases of takeovers.
A “largely undervalued” offer
On Sunday, Canadian retailer Alimentation Couche-Tard (ACT) announced its intention to continue its attempt to acquire its Japanese competitor 7-Eleven, owner of 85,000 stores worldwide, despite the rejection of its initial offer two days earlier. In its rejection letter addressed to Canadians, Japanese retail giant Seven & i Holdings had deemed this first offer as “grossly undervalued” et “opportunistic”.
The group had specified that ACT’s offer was $14.86 per share (€13.37), which is roughly the market value of Seven & i. But, in addition to the price, the Japanese group had also pointed out regulatory concerns. “Your proposal fails to adequately recognize the multiple and significant challenges that such a transaction would face from U.S. competition law enforcement agencies in the current regulatory environment.”the Japanese group said in the letter.
A possible distribution giant
But ACT has said it intends to press ahead, and if the deal goes through it would create a retail behemoth, with 85,000 stores in 19 countries owned by Seven & i – the operator of 7-Eleven convenience stores – and 16,700 stores in 31 countries owned by Couche-Tard, including the Circle K brand. It would also be the largest foreign acquisition ever of a Japanese company, valued at around 35 billion euros ($39 billion).
Among other classified entities “essential” In Japan, there are manufacturers in the nuclear, rare metals and microchip sectors, as well as companies in the cybersecurity and infrastructure sectors.
