Seven & i Holdings Co., one of Japan’s leading retail giants, saw its shares soar by 22.7% to ¥2,161 on Monday, marking its largest daily gain on record.
The surge followed the announcement that the company had received a buyout proposal from Canadian convenience store operator Alimentation Couche-Tard Inc.
The offer, valued at an estimated ¥5 trillion ($34.3 billion), could potentially become the largest foreign takeover in Japanese history.
Potential for a major shift in Japan’s retail landscape
The proposal, described by Seven & i as “confidential and preliminary,” is currently under review by an independent committee, with no decision made yet on whether to accept or reject it.
This development follows a report from Nikkei, which highlighted the size of the offer in relation to the company’s market capitalisation.
If the deal proceeds, it could mark a significant shift in Japan’s retail sector, given the scale and influence of Seven & i.
Seven & i has been under pressure from activist fund ValueAct Capital Management LP to reconsider its business strategy.
The retailer has already taken steps to address these concerns, including initiating a buyback and exploring the possibility of a separate listing for its supermarket arm, Ito-Yokado.
This would allow the company to concentrate more on its convenience store chain, which is the cornerstone of its operations.
Couche-Tard’s global ambitions
Alimentation Couche-Tard, which operates globally with a market value of C$80 billion ($58.5 billion), runs convenience stores under its own brand, as well as Circle K and Ingo.
The company’s approach to Seven & i is likely driven by the opportunity to acquire high-quality assets, particularly in the convenience store sector, which has been a key area of growth for both companies.
Seven & i’s 7-Eleven stores are among its most recognised assets, but the company’s portfolio is diverse, including Denny’s restaurants in Japan, the Ito-Yokado supermarket chain, and even its own banking arm.
The 7-Eleven brand, although originally American, was fully taken over by Japanese retailer Ito-Yokado in 2005.
Since then, it has become a pivotal part of Seven & i’s operations, now comprising an empire of 85,000 convenience stores, petrol stations, and retail outlets across the globe.
The interest from Couche-Tard comes at a time when 7-Eleven is looking to revitalise its operations in the US, aiming to replicate the success it has enjoyed in Japan.
The weak yen may also have played a role in Couche-Tard’s timing, making Japanese assets more attractive to foreign investors.
Investor response and future outlook
Investor response to the buyout proposal has been overwhelmingly positive, as reflected in the significant surge in Seven & i’s stock price.
Analysts remain cautious about the potential impact of such a large-scale transaction on the Japanese retail market.
Amir Anvarzadeh, a strategist at Asymmetric Advisors Pte., noted that Seven & i has been an “under-performing retailer” in recent years, with slow progress in its restructuring efforts.
He suggested that divesting non-core assets could be beneficial for the company in the long term.
The outcome of this proposal could set a precedent for future foreign takeovers in Japan, a market traditionally seen as resistant to such moves.
For Seven & i, the decision on whether to accept Couche-Tard’s offer will likely hinge on a careful assessment of its long-term strategic goals and the potential benefits of remaining independent versus becoming part of a larger, global entity.
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