7-Eleven rejects buyout offer by Circle K’s operator

7-Eleven's owner Seven & i (7&i) has rejected a US$39bn buyout offer from Circle K's owner Alimentation Couche-Tard (ACT), suggesting that the bid was too low.

In a statement issued last Friday (6 September), 7&i said the proposal was not in the best interest of its shareholders and other stakeholders, following the unanimous recommendation of the special committee after a comprehensive review and discussion of the offer.

“We are open to sincerely consider any proposal that is in the best interests of 7&i shareholders and other stakeholders; however, we will resist any proposal that deprives our shareholders of the company’s intrinsic value or that fails to specifically address very real regulatory concerns,” the statement reads. 

7&i said that ACT’s original proposal is opportunistically timed and grossly undervalues 7&i’s standalone path and the additional actionable avenues it sees to realise and unlock shareholder value in the near to medium term. 

“The 7&i board believes that even if you were able to improve the value element of your proposal very significantly, 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 and provides no certainty to closing,” the statement reads.

Meanwhile, 7&i said despite ACT’s simple assertion that it does not believe that a combination would unfairly impact the competitive landscape and that it would “consider” potential divestitures, ACT has not provided any indication regarding the extent of divestitures that might be necessary or how they would be implemented. This includes the timeline required to navigate regulatory hurdles and whether ACT would be willing to take all necessary steps to secure regulatory approval, including legal action against the government.

In response, ACT said it is disappointed in 7&i's refusal to engage in friendly discussions. While ACT requested to have its advisors engage in discussions with 7&i's advisors and offered to enter into a non-disclosure agreement (NDA) to enable both sides to share information to find more value, both request were rejected, according to ACT's statement. 

"We remain ready and willing to enter into an appropriate NDA to advance friendly discussions. In addition to enabling Couche-Tard to find more value, engagement will also enable us to refine our regulatory proposal to sufficiently address deal certainty, as referenced in 7&i's response letter," the statement reads. 

Don’t miss: Circle K’s operator proposes to take over 7-Eleven business

Back in August, ACT sent a proposal to 7-Eleven's owner Seven & i for a potential takeover of its convenience store business for US$14.86 per share in cash. It is focused on reaching a mutually agreeable transaction that benefits both companies’ customers, employees, franchisees and shareholders.

A statement by Seven & i also stated that the board of directors has formed a special committee, comprised solely of independent outside directors, led by Stephen Hayes Dacus, as chairperson of the board of directors, to review the proposal. 

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