08:44 AM EDT, 09/04/2024 (MT Newswires) -- The yen's rapid appreciation over the past month presents another hurdle to Alimentation Couche-Tard Inc.'s ( ANCTF ) takeover proposal for Japan's Seven & i Holdings Co., Bloomberg News is reporting.

It noted a buyout by the Canadian convenience store operator, which would be the biggest-ever foreign acquisition of a Japanese company based on Seven & i's current market capitalization, already faces questions in terms of potential funding and the target's efforts to seek government protection.

Bloomberg noted the yen has surged about 11% since hitting multi-decade lows versus both the dollar and its Canadian counterpart in early July. Currency strategists expect the rally will continue in coming months as Japan's interest rate gap with other nations narrows, making Seven & i increasingly expensive for the foreign suitor.

The stronger yen could even raise the prospect of Seven & i trying to defend itself by making a reverse takeover proposal for Couche-Tard, according to Koji Hirai, president of merger-and-acquisitions advisory firm Assist.

To be sure, Bloomberg noted, the yen is still 24% weaker against the Canadian dollar than it was four years ago.

Couche-Tard hasn't provided terms or a price for its proposed buyout of Seven & i, which has a market capitalization of about (Yen)5.7 trillion yen ($39 billion). Couche-Tard's value in US currency terms is about $52 billion. Bloomberg said "that makes the Japanese company a big mouthful, and one that will get larger if the yen continues to advance".

The potential impact of the rising yen balloons further when considering how much higher the price tag may be when looking at multiples for past deals by Couche-Tard, Bloomberg added. A representative of Seven & i declined to comment, while Couche-Tard didn't immediately respond to a request for comment.

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