7-Eleven Inc has rejected an unsolicited takeover proposal as it significantly undervalues their company.

Customers exited a 7-Eleven convenience store operated by Seven & I Holdings Co. in Kobe, Japan on Friday August 30, 2024. Alimentation Couche-Tard Inc. submitted an initial, non-binding proposal to acquire Seven & i, which operates over 85,000 stores globally; such an acquisition would mark one of the biggest foreign takeovers ever of a Japanese firm. “In April, Seven & i unveiled its restructuring plan for 7-Eleven that sought to expand global presence while divesting underperforming supermarket business. Dacus noted that even if Couche-Tard increased their offer significantly, such a proposal does not take into account “multiple and significant challenges” faced from anticompetition authorities within the U.S. “Dacus stated that Seven & i is open to considering proposals that are in the best interests of its stakeholders and shareholders; however, any proposal which deprives shareholders of intrinsic company value or fails to address specific regulatory concerns would likely be met with strong resistance by its board of directors. “Shareholder OutrageSpeaking with CNBC’s Squawk Box Asia shortly before their response was filed, Ben Herrick of Artisan Partners noted the Couche-Tard offer illustrates “how this management team and board have not done everything possible to increase corporate value for this organization. Artisan Partners, a U.S. fund with just over one percent ownership in Seven & i Holdings, had recently suggested to Seven & i that they “seriously consider” Artisan’s buyout offer and submit offers quickly for its Japanese subsidiaries as soon as possible.” Herrick explained Artisan asked Seven & i to consider Artisan’s offer as they believe capital allocation overseas has been overlooked. While Seven & i’s Japanese convenience store business doesn’t need much adjustment, there exists “huge potential” with international licensees operating outside the U.S. “Your company operates over 50K stores that collectively are producing just over $100M of operating profit annually for your company.” Herrick believes Seven & i has been slow in adopting changes due to inadequate oversight and accounting oversight; therefore they require them to implement their plan faster here. “This really needs to change rapidly here.” So [Seven and i President Ryuichi Isaka] issued his 100 Day Plan in 2016 in an effort to transform Ito-Yokado; we’re nearing day 3,000 now. “Speed hasn’t been part of their culture and that needs to change,” he stated. Richard Kaye from Comgest disagreed in an interview on CNBC’s Squawk Box Asia on Monday; he stated “there’s no case” for radical reform to be initiated from outside, given how well-run logistics and product innovation already is under existing leadership compared with potential acquisition by foreign acquirers; instead he noted “it would be hard to assume they could do any better”.