Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The Japanese operator of 7-Eleven, the world’s biggest convenience store chain, has received a takeover approach from the Canadian retailer Alimentation Couche-Tard, which controls the Circle K brand.
Couche-Tard’s approach to Seven & i Holdings follows more than a year of on-off talks between the two retailers and is the biggest-ever foreign-led takeover attempt to target a Japanese company.
Seven & i’s shares rose 23 per cent on Monday, pushing the market capitalisation of the company to $39bn.
In a statement Seven & i said it had set up a special committee of non-executive board directors to examine the proposal from Couche-Tard, which seeks to acquire all its outstanding shares. The approach is the first to fully exploit recent changes in M&A guidelines to make it harder for Japanese company managements to ignore unsolicited or unwanted offers.
According to multiple people familiar with the matter, Seven & i has for some months been working with banking advisers including Morgan Stanley, to fortify itself against what it saw as the rising threat of a foreign-led acquisition.
Couche-Tard has been circling Seven & i for several years, making on-and-off contact with the Japanese company within the past two years in an attempt to open friendly deal discussions, say the same people.
The move from Couche-Tard, said banking sources, could also draw in other bidders for the company, including private equity groups which have long coveted the US network of 7-Eleven stores. News of the bid was first reported by the Nikkei.
Seven & i’s preparations for a potential takeover follow a pivotal revision last year of Japan’s merger and acquisition guidelines. The new wording strongly encourages companies to seriously consider any “bona fide” offers at the board level, ending decades where powerful chief executives could unilaterally reject bids against the interests of shareholders.
The change, say M&A bankers and lawyers, clears the way for foreign buyers to make unsolicited bids for more Japanese companies.
Seven & i has recently overhauled its board and attitude to corporate governance, they said, under pressure both from activist investor ValueAct, which made its stake in the group public in 2021, and Japan’s wider push to reform how companies engage with shareholders. The group’s founder Masatoshi Ito, a top shareholder, died last year.
Couche-Tard has engaged Goldman Sachs as its banking adviser. Morgan Stanley and Goldman declined to comment. Couche-Tard could not immediately be reached for comment.
If a deal with the Canadian group is completed it could face significant competition hurdles. After its acquisition of US petrol station group Speedway in 2021, 7-Eleven owns more than 13,000 stores in the US and Canada, while Couche-Tard has closer to 9,000. ValueAct has pushed for a spin-off of the 7-Eleven chain.
In response to the pressure for reform, Seven & i has also expanded internationally and shed less profitable businesses. It sold its Sogo & Seibu department store to Fortress Group last year.
Couche-Tard has been on the hunt for global acquisitions. The group has completed multiple takeovers over the past decade in the fragmented convenience store sector. It tried and failed to buy France’s Carrefour supermarket chain for €16.2bn in 2021.
Couche-Tard also bid for Speedway, which was eventually acquired by Seven & i for $21bn.
