Shares in Japan's Seven & i plunge 9% after Couche-Tard withdraws takeover bid

A 7-Eleven convenience store, operated by Seven & i Holdings Co., in Kawasaki, Japan, on Monday, Aug. 19, 2024.

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Shares of Seven & i fell more than 9% Thursday after Canada’s Alimentation Couche-Tard withdrew its $47 billion bid to acquire the Japanese company.

Trading in Seven & i was halted early trading hours. Convenience store operator Couche-Tard announced Wednesday that it was pulling its takeover bid for Japan’s Seven & i Holdings, saying there was a “persistent lack of good faith engagement.”

“There has been no sincere or constructive engagement from 7&i that would facilitate the advancement of any proposal, contrary to comments made publicly by 7&i representatives,” the Canadian retailer said in a statement.

The operator of 7-Eleven stores expressed disappointment at Couche-Tard’s “unilateral” termination of talks and withdrawal of its bid, and said it disagreed with many of the company’s “inaccurate statements,” according to a Google translation of Seven & i’s statement in Japanese.

The company in 2024 rejected a buyout bid from Couche-Tard, which had initially made an offer of $14.86 per share in August last year, saying it “grossly undervalues” the company.

Couche-Tard then reportedly raised its offer in October by over 22% to $18.19 per share, valuing Seven & i at 7 trillion Japanese yen, or about $47 billion.

“As we have expressed many times, we do believe that fully combining our two companies is the most straightforward and effective way to maximize value to all stakeholders,” Couche-Tard said. “However, we are not able to effectively pursue this combination without deeper and genuine further engagement from 7&i leadership and the special committee.”

Trading in Seven & i shares was suspended on Thursday before the Japanese market opened, and resumed at 10.16 a.m. local time (Wednesday 9.16 p.m. ET)

“The moat of Japanese protectionism proved too much for Couche-Tard to cross,” said Andrew Jackson, head of Japanese equity strategy at Ortus Advisors.

He added it was always “highly unlikely” that the deal was going to be successful given Seven & i’s positioning as “one of Japan’s most successful global companies” and its classification as “core” to Japan’s national security.

Seven & i Holdings replaced Ryuichi Isaka as CEO with outside director Stephen Dacus taking the helm in May.

— CNBC’s Lim Hui Jie contributed to this report.