As the world’s biggest convenience store chain, 7-Eleven operates more than 85,000 outlets globally.
A letter from the board of Seven & i Holdings to its Canadian rival said it was open to “engaging in sincere discussions should you put forth a proposal that fully recognizes our standalone intrinsic value”.
“We do not believe, for several critical reasons, that the proposal you have put forward provides a basis for us to engage in substantive discussions regarding a potential transaction,” it said.
The purchase of Seven & i Holdings would be the biggest ever foreign takeover of a Japanese firm.
Such a merger would create an international convenience store behemoth combining 7-Eleven, Couche Tard, Circle K and other brands across Asia, North America and Europe.
Seven & i has a market value of around 5.6 trillion yen ($39 billion). 7-Eleven stores are a beloved institution in Japan, selling everything from ready-made meals to umbrellas.
The board’s letter said Alimentation Couche-Tard (ACT)’s offer was $14.86 per share in cash.
ACT operates more than 16,700 outlets in 31 countries and territories.
The letter called the proposal “opportunistically timed” and said it “grossly undervalues our standalone path and the additional actionable avenues we see to realize and unlock shareholder value in the near- to medium-term”.
It also raised regulatory concerns.
“Your proposal does not adequately acknowledge the multiple and significant challenges such a transaction would face from U.S. competition law enforcement agencies in the current regulatory environment,” the letter said.
Seven & i Holdings is the largest retailer in Japan.
As well as operating 7-Eleven, the country’s biggest convenience store chain, its businesses include supermarket operator Ito-Yokado, restaurant chain Denny’s, and Tower Records, a once-popular US record store that went bankrupt.
Seven & i has reportedly asked the Japanese government to designate parts of the company as “core”, which would make a takeover more difficult.
Brands with the “core” rating in Japan range from manufacturers in the nuclear, space, rare earths and chip industries to cybersecurity operators and key infrastructure service providers.
