Japanese distribution giant Seven&i Holdings, owner of the iconic 7-Eleven stores, unveiled a restructuring plan for its activities on Thursday, intended to strengthen it in the face of takeover attempts by its Canadian rival Alimentation Couche-Tard.
The Japanese group, which owns 85,000 stores in around twenty countries – mainly 7-Eleven – rejected at the beginning of September a first takeover proposal, $14.86 per share in cash, from Couche-Tard, which he considered undervalued.
But the Canadian heavyweight in the sector has since presented a significantly improved offer – which values the group at $47.2 billion according to Bloomberg’s estimate – which would make it the largest acquisition ever seen of a Japanese firm by a foreign actor.
Seven&i intends to defend itself: it announced Thursday that it wanted to concentrate on its 7-Eleven stores, the heart of its activity, by creating a separate unit to manage its other subsidiaries (bank, Ito-Yokado supermarkets, online sales, etc.) whose growth “differs from that of local stores”.
This new entity could be listed on the stock exchange to “unleash value for shareholders and other stakeholders”, he argues. A way, therefore, to increase its stock price in the face of Couche-Tard’s claims.
Shareholders of the Japanese group have long called for this refocusing on stores. To symbolize its transformation, Seven&i plans to rename itself “7-Eleven Corporation”.
Organizing these activities independently, by using capital “more efficiently” while maintaining “synergies”, will make it possible to “achieve higher growth” and boost the group’s stock market valuation, insisted CEO Ryuichi Isaka before the press.
At the same time, Seven&i published mixed quarterly results on Thursday: suffering from the decline in Japanese household consumption against a backdrop of persistent inflation in the archipelago, it lowered its operating profit forecasts for its annual financial year. .
“Essential” business
The Japanese announced on Wednesday that it had “received a revised offer” from Couche-Tard, without providing details. According to financial media, this time it amounted to $18.19 per share, or around 20% more than the first proposal.
And very significantly above the share price of Seven&i, which closed Thursday at 2,325 yen (around $15.6) on the Tokyo Stock Exchange. The stock has climbed more than 30% since mid-August, boosted by interest from Couche-Tard.
The negotiations must remain “confidential”, Mr. Isaka simply commented to the press on Thursday.
For its part, Couche-Tard, the brand with the “red owl” and giant of “convenience stores” as Quebecers call their local stores, intends to change dimension.
The Canadian already has some 16,700 stores in 31 countries, which include the Circle K brand: by adding the network of 84,000 7-Elevens across Asia and North America, it would give birth to an international juggernaut of distribution.
7-Eleven is the world’s largest convenience store chain. A quarter of them are in Japan, where these omnipresent stores sell takeaway meals as well as concert tickets and offer services (ATMs, bill payment, photocopier, etc.).
Enough to make it a symbol in the country: in mid-September the Japanese government classified Seven&i as an “essential” company to the industrial sector, a decision likely to complicate a foreign takeover.
And according to experts, such an operation could raise reservations from antitrust regulators, given the influence of the new combined entity.
In early September, Seven&i believed that Couche-Tard’s proposed purchase did not “adequately recognize the multiple and significant challenges that such a transaction would face from U.S. agencies responsible for enforcing competition law.”
A sign of its appetite, Couche-Tard had unsuccessfully attempted a merger in 2021 with the French group Carrefour – which Paris was then strongly opposed to – and acquired stations from TotalEnergies in Europe for 3.4 billion euros.