[TOKYO] Alimentation Couche-Tard and Seven & i Holdings have signed a non-disclosure agreement that will give the Canadian company access to the 7-eleven operator’s financial data as it seeks to formalise a buyout offer, the companies said.
They also agreed to a standstill provision, Seven & i said on Thursday (May 1), adding that the terms are confidential. They are commonly used to prevent a potential buyer from making a hostile bid while also giving it a fair chance to negotiate a deal.
The agreement is a victory for Couche-Tard, which had been seeking since last year to deepen its engagement with Seven & i over its unsolicited 7.4 trillion yen (S$67.6 billion) proposal to buy the Japanese company. Earlier this year, they agreed to seek a potential buyer for overlapping retail outlets as a prerequisite for takeover talks, given that US antitrust concerns could potentially derail any deal.
“We appreciate the Special Committee of Seven & i engaging in substantive discussions regarding our proposal and providing access to diligence,” Alex Miller, Couche-Tard’s chief executive officer, said.
Seven & i shares rose as much as 3.5 per cent in morning trading in Tokyo. While that reflects some optimism over a higher chance for a deal, they continue to trade about 24 per cent below Couche-Tard’s proposed price.
The discount reflects Seven & i’s reluctance since August to enter into formal negotiations with Couche-Tard. The Japanese company’s statement on Thursday also indicated its desire to remain independent.
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“We remain committed to pursuing two parallel paths to ensure that value for shareholders and other stakeholders is maximised,” Paul Yonamine, the chair of its special committee of the board of directors at Seven & i, said. The two paths refer to a plan to split the company to focus on its convenience stores business and engagement with Couche-Tard.
Seven & i appointed Stephen Dacus, former chair of the committee, as CEO in March to overhaul the retailer in order to boost growth and deliver greater shareholder value. Seven & i is selling its underperforming supermarkets and stores, seeking a public listing of its US business, and will buy back two trillion yen worth of shares till 2030.
The company plans to boost investment in its US stores using cash from a planned listing of its American retail operation next year, as well as reviewing its supply chain globally to cut costs down, Dacus said in an interview last month.
“Unlocking significant value for shareholders and other stakeholders remains Seven & i’s top priority,” Yonamine said. BLOOMBERG
