Japan's Seven & i Holdings under pressure to negotiate buyout with Canada's Couche-Tard

A major shareholder in Japan’s Seven & i Holdings is urging the company to engage more seriously with Canadian retailer Alimentation Couche-Tard over its $47.5 billion buyout proposal.

Artisan Partners Asset Management, which holds about 1 per cent stakes in both Seven & i and Couche-Tard, criticiced the Japanese company’s handling of the bid in a letter to its board on Sunday (March 9).

The US-based investor raised concerns about potential conflicts of interest and questioned whether the board is prioritising shareholder value.

“The Board has taken several decisions that leave significant unanswered questions,” portfolio managers N. David Samra and Benjamin L. Herrick wrote, according to a report by Bloomberg . They argued that Seven & i has failed to pursue the best path forward for the company.

Ongoing standoff over buyout offer

Couche-Tard, which operates Circle K convenience stores and gas stations, made an offer last year to acquire the parent company of 7-Eleven for $18.19 per share. Seven & i has so far resisted the bid, opting instead for a corporate overhaul to boost shareholder value.

Last week, the company announced a series of major changes, including the sale of its superstore business for $5.4 billion, a $13.4 billion share buyback program, and plans to list its US business. Stephen Dacus, a current board director, was also named the new chief executive.

Artisan Partners questioned Dacus’ role in the negotiations, highlighting his position as chairman of the special committee reviewing Couche-Tard’s offer while also serving on the nomination committee that considered his own appointment as CEO. The investor argued that basic corporate governance standards should have required him to step down from both committees.

“Shareholders can have no confidence that the special committee has run, nor continues to run, a thorough evaluation process,” Artisan said, warning that it may vote against Dacus and other board members at the company’s next annual meeting.

Next steps in takeover talks

Both companies have said they are working on a potential divestiture of US stores to address antitrust concerns if a takeover moves forward. However, investor skepticism remains high, with Seven & i’s stock trading more than 20 per cent below Couche-Tard’s offer price.

Artisan Partners renewed its call for Seven & i to seriously consider the deal, arguing that the company has underperformed in North America and could benefit from Couche-Tard’s management expertise.

Bloomberg News reported that Couche-Tard has not yet signed a non-disclosure agreement that would allow it to review Seven & i’s financials– an essential step before making a formal binding offer.

Couche-Tard executives, including founder and chairman Alain Bouchard, are expected to travel to Tokyo this week to push for further negotiations. They also plan to hold a news conference on March 13 to publicly make their case for acquiring Seven & i.