Seven & i Holdings Seeks Government Protections After Couche-Tard Offer

Requested designation would require Japan’s Ministry of Finance to vet any purchases of shares above 10%.

August 29, 2024

Seven & i Holdings, the parent company of 7-Eleven, is seeking protections from the Japanese government after Alimentation Couche-Tard Inc.’s $38 billion buyout proposal earlier this month.

The company “wants the Japanese government to require prior notification of any purchase of its shares above 10%, people familiar with the matter said, raising a potential hurdle for Alimentation Couche-Tard Inc.’s buyout proposal to proceed,” reported Bloomberg.

Seven & i is seeking designation as a “core” company under the Foreign Exchange and Foreign Trade Act, an upgrade from its current “non-core” status under the law. Core companies include sectors such as aerospace, nuclear energy, and rare earths. The law was designed to protect the country from security risks, such as the outflow of military technology. Under a core designation, Japan’s Ministry of Finance would have to vet any entity seeking to acquire more than 10% of a company, while under the company’s current non-core category, a takeover effort would require approval only after an agreed deal.

“In its application to become a ‘core’ company, Seven & i is arguing that its convenience stores play a critical role in supplying food and supplies in the event of natural disasters, the people said. They also provide municipal services, allowing residents to obtain official documents,” reported Bloomberg.

In its statement regarding the proposed acquisition, Seven & i Holdings said that it has formed a special committee of the board of directors, comprised solely of independent outside directors, which will “conduct a prompt, careful and comprehensive review of the proposal, the company’s stand-alone plans and other alternatives for enhancing corporate value, after which a response will be made to ACT,” reported NACS Daily.

Neither the board of directors nor the special committee has made any determination at this time to either accept or reject the proposal from ACT, to enter into discussions with ACT or to pursue any alternative transaction.

If the bid goes through, it would be the biggest foreign takeover of a Japanese company on record, CNN reported.