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Seven & i Holdings, the Japanese company that owns 7-Eleven, saw its shares fall 8% in morning trading on Tuesday.
Shares of Seven & i Holdings, the Japanese owner of 7-Eleven, fell by 8% in morning trade on Tuesday. This drop followed a significant surge in the company’s stock on Monday after news broke of a takeover proposal from Canada’s Alimentation Couche-Tard, the owner of Circle-K convenience stores.
The initial excitement surrounding the potential acquisition sent Seven & i’s shares soaring nearly 23% on Monday, pushing the company’s market value to approximately 5.6 trillion yen ($38 billion). However, Tuesday’s decline suggests that investors may be reassessing the likelihood or potential complications of the deal.
While the specific value of Couche-Tard’s offer has not been disclosed, it is poised to become the largest-ever Japanese target of a foreign buyout. The proposal reportedly involves Couche-Tard acquiring all of Seven & i’s outstanding shares.
Seven & i has established a committee of independent directors to thoroughly review the offer in response to the takeover proposal.
Analysts, including Jefferies, see this move as a positive step. They noted that the formation of the committee is a good sign but cautioned about the potential hurdles related to the scale of the transaction and antitrust issues.
Cole Smead, CEO of Smead Capital Management, which owns shares in Couche-Tard, commented on the situation. He stated that the proposal was not surprising given Couche-Tard’s history of pursuing large acquisitions. He expressed confidence in Couche-Tard’s ability to enhance the profitability of Seven & i’s existing operations, particularly its Speedway and 7-Eleven locations.
Couche-Tard has confirmed that it made a “friendly proposal” to Seven & i and is focused on reaching a mutually agreeable transaction. The Canadian company, valued at around $58 billion, has a track record of acquiring assets and improving business margins.
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