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((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
(Reworked and added analyst quotes) by Anton Bridge, Makiko Yamazaki and Kane Wu
Japanese company Seven & i
3382.T , the owner of 7-Eleven convenience stores, said it has received a preliminary takeover offer from Canadian company Alimentation Couche-Tard ATD.TO , in what could be the largest acquisition of a Japanese company by a foreign firm.
News of the offer sent shares of the Tokyo-listed company soaring nearly 23%, valuing it at about 5.6 trillion yen ($38 billion). Couche-Tard, which operates Circle-K convenience stores, is valued at about $58 billion.
Seven & i formed a special committee to review the proposal, it said in a statement Monday, adding that no decision has been made by the committee or its board. The announcement came following a report on the transaction by the Nikkei newspaper.
Alimentation Couche-Tard did not immediately respond to a request for comment outside of its usual business hours.
Talks are “at a very early stage,” said a source familiar with the matter, who declined to be identified.
A deal for the entire company would be the largest takeover of a Japanese company by a foreign firm, according to LSEG data, after the 2018 deal for Toshiba’s memory chip business by a consortium led by private equity firm Bain.
For investors, it would also be a new milestone in the growing attractiveness of previously shunned Japanese assets.
Changes in corporate governance have helped underscore the renewed interest in Japan and Japanese companies, according to Duncan Clark, chairman and founder of investment advisory firm BDA.
“We’ve seen that with the number of financial institutions that are setting up or hiring in Japan,” Clark said.
Last year, Japan was home to one of the world’s best-performing stock markets, and this year the Nikkei index hit a series of records as investors cheered governance reform.
“This is another example of the attractiveness of the Japanese market to foreign buyers,” said Manoj Jain, co-founder and co-director of Hong Kong-based Maso Capital.
“Coupled with interest from private equity funds, this trend is expected to continue due to the value of the underlying assets, the potential for efficiency gains and the cost of financing,” Jain added.
Seven & i has come under pressure from activist investors, who have urged it to sell underperforming assets and refocus on its global convenience store business centered on its flagship 7-Eleven brand.
Founded in 1980, Couche-Tard has grown from a single store in Quebec to a global network of convenience stores and gas stations, primarily through acquisitions.
The deal, if completed, would follow Couche-Tard’s purchase of some European gas stations from TotalEnergies TTEF.PA for $3.3 billion last year and a $20 billion bid for Europe’s largest food retailer, Carrefour, that was rejected in 2021 by the French government over food safety concerns.
In 2020, Seven & i and Couche Tard were rival bidders to take over the American gas station chain Speedway, which the Japanese company eventually bought for $21 billion. ($1 = 146.2200 yen)
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