7-Eleven operator rejects Circle K merger offer, values business higher

The operator of 7-Eleven, Seven & I Holdings, has turned down a merger offer from Alimentation Couche-Tard, the owner of Circle K, stating that the bid undervalues its business. The offer, which was $14.86 per share, totals approximately $38.5 billion. Seven & I expressed willingness to consider proposals that benefit shareholders but emphasized that they would reject any that compromise the company's intrinsic value or overlook regulatory issues. The rejection comes amid changes in Japan's corporate takeover guidelines, which have made it more challenging for companies to dismiss unsolicited offers. The potential merger was significant as it would have created a major player in the convenience store market, controlling nearly 20% of the U.S. market. However, analysts raised concerns about the regulatory hurdles the deal would face, particularly from U.S. antitrust authorities. Seven & I highlighted that the proposal did not sufficiently address these challenges, indicating a cautious approach to foreign investment in Japan. Seven & I Holdings operates over 83,000 stores globally, including 7-Eleven and Speedway gas stations in the U.S. The company has been expanding its North American presence, notably through its acquisition of Speedway for $21 billion in 2021. The founder of 7-Eleven, Masatoshi Ito, played a crucial role in its global expansion before his passing last year. The rejection of the merger offer reflects a broader trend in Japan, where companies are increasingly valuing their assets amid a changing investment landscape. The situation underscores the complexities of cross-border mergers and the importance of regulatory considerations in such transactions.