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DALLAS -- 7-Eleven Inc.'s directors have advised shareholders not to accept an "inadequate" tender offer from parent Seven-Eleven Japan Co, according to the Associated Press .
A special committee of board members determined that Seven-Eleven's bid of $32.50 per share was too low and therefore "not in the best interests" of shareholders, 7-Eleven said.
The company added that its advisers are discussing an increased offer with Seven-Eleven Japan, but said there can be no assurance that the Dallas-based company will receive an improved proposal.
As previously reported on CSNews Online , Seven-Eleven Japan intended to buy outstanding shares of 7-Eleven to help strengthen the U.S. chain’s operations. The $1.02 billion deal would be made through Seven-Eleven Japan's wholly owned subsidiary, IYG Holding Co.
Seven-Eleven Japan currently owns 72.7 percent of the outstanding common stock of the U.S. chain, and made the to offer to acquire the balance of common stock at a price of $32.50 per share in cash, representing a 15 percent premium over the closing price for 7-Eleven's shares on Aug. 31.
The Japanese company said the buyout is necessary to "maintain 7-Eleven's growth and to allow [it] to compete effectively in the increasingly competitive convenience store and retail industry over the long term." SEJ said the U.S. operation must increase its investment in merchandising, store renovation, distribution and logistics, and information systems.
7-Eleven operates or franchises about 5,800 stores in the United States and Canada and licenses more than 22,000 worldwide.
Shares of 7-Eleven fell 37 cents to close at $35.54 Wednesday on the New York Stock Exchange.