7-Eleven feels the heat over rival bid

Reuters and staff reporter

Shares of Japan's Seven & i retreated by as much as 12.4 percent yesterday, as the possibility of the buyout bid by its smaller rival Circle-K operator Alimentation Couche-Tard is expected to be low.

Couche-Tard's balance sheet itself might not be strong enough to sustain a strong cash offer, LightStream Research analyst Mio Kato said.

"I don't think Seven & i would want to sell and without an attractive cash offer, I think the probability of something happening is quite slim," he said.

Futu Securities Hong Kong's chief strategist Alan Luk Ping-kwan said Seven & i's shares were experiencing a slump, so it is understandable why ACT made its move. However, the possibility of a successful acquisition is expected to be less than half, as the buyer and seller may have differences in the acquisition price, payment method, and other issues, he added.

ACT has operated Circle-K stores in Hong Kong on its own, since it bought back the business from Convenience Retail Asia (0831) for HK$2.79 billion in 2020.

Luk said that the total number of stores in Hong Kong may be reduced if the two companies merge.

Hong Kong consumers worry that prices will increase if the bid succeeds.

"There is no competition in one company, so the price will tend to be relatively the same and the bargains will be less," a customer said.

Seven & i closed 10.5 percent lower at 1,933 yen (HK$103) yesterday, giving up some of its gains after the news of the takeover proposal sent its shares surging by almost 23 percent in Tokyo on Monday, valuing the retailer at around 5.6 trillion yen.