The Japanese owner of convenience store chain 7-Eleven has rejected a $38bn (£29.2bn) takeover bid from Canadian rival Alimentation Couche-Tard.
in a letter addressed to Seven & i Holdings has told potential buyers that the offer from Circle K’s owners “significantly” undervalues the company and is fraught with regulatory risks.
However, the 7-Eleven boss added that it remains open to negotiations and ready to consider better offers.
If the acquisition is successful, it will create a global convenience store giant with 100,000 employees.
Stephen Dacus, chairman of Seven & i’s board of directors considering the deal, said in a letter that the proposal was “opportunistically timed.”
Dacus added that the proposal “severely underestimates” the Japanese retail giant and its potential to create more value for shareholders.
Alimentation Couche-Tard (ACT), headquartered in Quebec, operates approximately 17,000 stores in North America, Europe and Asia under the Circle K and Couche-Tard brands.
Potential buyers initially offered Seven & i $14.86 per share. This is more than 20% higher than the share price before the takeover bid was announced.
The offer comes at a time when the yen is significantly weaker than the U.S. dollar, making Seven and I More affordable for foreign buyers.
In rejecting the proposal, Seven & i also noted that the deal would face “multiple significant challenges” from U.S. competition regulators.
7-Eleven is the world’s largest convenience store chain, with 85,000 stores in 20 countries and regions.
If the deal goes ahead, ACT’s footprint in the United States and Canada will more than double to about 20,000 sites.
A Japanese company of this size has never been acquired by a foreign company.
Historically, Japanese companies have been more likely to acquire overseas businesses.
Neil Newman, head of strategy at Astris Advisory Japan, said: “Japan needs to protect its national assets… and Seven & i is an important asset, so it is expected to be a lengthy negotiation process.”
“If successful… then it will show that Japan is open for business and welcomes foreign investment.”
Last year, the Japanese government issued new M&A guidelines calling on companies not to reject credible takeover offers without sincere consideration.
ACT did not immediately respond to BBC News’ request for comment.
