A key investor is pressuring Japan’s Seven & i Holdings to take Canadian retailer Alimentation Couche-Tard’s $47.5 billion buyout offer more seriously. Artisan Partners Asset Management, a U.S.-based investment firm, holds about 1% stakes in both companies. In a letter to the board on March 9, it criticized Seven & i’s handling of the proposal. Furthermore, the firm raised concerns about conflicts of interest and questioned whether the board is acting in shareholders’ best interests.
Concerns Over Board Decisions
Artisan Partners accused the board of making unclear decisions. “The Board has taken several decisions that leave significant unanswered questions,” wrote portfolio managers N. David Samra and Benjamin L. Herrick. Moreover, they argued that Seven & i has not chosen the best path for the company. Bloomberg first reported their concerns.
Seven & i Resists Buyout Offer
Last year, Couche-Tard, which owns Circle K stores and fuel stations, made an offer to acquire Seven & i, the parent of 7-Eleven. It proposed $18.19 per share. However, Seven & i rejected the deal. Instead, it announced a corporate overhaul to increase shareholder value.
As part of this strategy, the company recently made major changes. It sold its superstore business for $5.4 billion, launched a $13.4 billion share buyback plan, and decided to list its U.S. business. Additionally, the board appointed director Stephen Dacus as the new CEO.
Conflict of Interest Concerns
Artisan Partners questioned Dacus’ role in the negotiations. Notably, he chaired the special committee reviewing Couche-Tard’s offer while also serving on the nomination committee that approved his own appointment as CEO. Consequently, the investor argued that he should have stepped down from both roles.
“Shareholders can have no confidence that the special committee has run, nor continues to run, a thorough evaluation process,” Artisan stated. As a result, the firm warned it may vote against Dacus and other board members at the next annual meeting.
Takeover Talks Face Challenges
Both companies acknowledged that a takeover would require selling U.S. stores to meet antitrust rules. Nevertheless, investors remain skeptical. Currently, Seven & i’s stock price is more than 20% below Couche-Tard’s offer price.
Given these concerns, Artisan Partners insisted that Seven & i should reconsider the deal. The firm argued that the company has underperformed in North America and would benefit from Couche-Tard’s leadership.
Meanwhile, Bloomberg News reported that Couche-Tard has not yet signed a non-disclosure agreement. Without this step, the company cannot review Seven & i’s financials or make a formal binding offer.
What’s Next?
Looking ahead, Couche-Tard executives, including founder and chairman Alain Bouchard, plan to visit Tokyo this week. Furthermore, they scheduled a press conference on March 13 to push for negotiations and publicly explain their case for acquiring Seven & i.
