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Reuters
5 days ago
- Business
- Reuters
Japan provides reality check for Couche-Tard's grand retail dream
TOKYO, July 18 (Reuters) - Alimentation Couche-Tard's ( opens new tab attempt to create a global convenience store behemoth was set back when it pulled its $46 billion bid for Seven & i (3382.T), opens new tab, whose consumers in Japan have emotional ties to their purveyor of rice balls. The Canadian company, which owns Circle-K, withdrew its bid on Thursday after a year-long pursuit, citing "a calculated campaign of obfuscation and delay" by the Seven-Eleven operator and lack of engagement by its founding Ito family. Couche-Tard first disclosed the proposal in August last year, with Seven & i under pressure from shareholders to boost returns by selling off assets and focusing on its mainstay convenience store business. "ACT bid at just the right time... when Seven was at its weakest," said Michael Causton of consultancy JapanConsuming. The possibility of a takeover quickly sparked concern about whether the Seven-Eleven operator's fresh food would be affected. It also generated debate about Japan's openness to foreign takeovers. Convenience stores are an important resource in Japan during natural disasters, but Seven-Eleven's massive global presence made it a target for Couche-Tard. With Seven & i looking to avoid a takeover, it changed its self-reported national security category to "core" in September, a step which raised questions as to whether it was a defensive manoeuvre. In private, it emphasised its importance to Japan's economic security to the government, three sources familiar with the matter said. Seven & i declined to comment. The Canadian company hiked its proposal price in October, with Seven & i revealing plans to hive off assets the same month. The Japanese firm also announced plans to list its North America business. "It has sparked the management into being more proactive," said Lorraine Tan, an analyst at Morningstar. The company had expressed concerns about the regulatory hurdles to a deal. "Couche-Tard seemed to want to iron out the details after Seven & i had agreed to the deal," said Travis Lundy, an analyst who publishes on Smartkarma. Couche-Tard's approach appeared to gain a tailwind when an attempt by the Ito founding family to buy Seven & i collapsed in February after failing to secure funding. Then, after initially providing little public explanation for pursuing the deal, Couche-Tard in March made a publicity push for the combination emphasising its financial credentials. However, the Canadian retailer faced growing challenges including lacklustre retail spending in the U.S., with its stock price sliding between the end of last year and Wednesday's close. "Couche-Tard may have realised that the cost cannot justify the risks, including prolonged negotiations and uncertain business prospects," said Tatsunori Kawai, chief strategist at Mitsubishi UFJ eSmart Securities. Its shares jumped 8% on Thursday after withdrawing the bid. "To continue further... would ultimately be a lost opportunity for its own growth," said Takahiro Kazahaya, an analyst at UBS. Analysts are also questioning how Seven & i, famed for its ready meals, will drive further growth. On Thursday, Natsuko Douglas, an analyst at Macquarie Capital, downgraded Seven & i to neutral from outperform, citing unclear benefits from the planned listing of the North America business. "Full recovery is a long time away," she wrote in a note. The planned listing is "something they probably don't want to do but were prepared to do to get rid of Couche-Tard," said Tom Leske, director at Churchill Capital. Industry experts point to Seven & i's strengths, honed over decades in Japan's bruising retail market, which has proved tough for many foreign entrants. "Seven globally will be giving competitors a hard time once it has its ducks in a row," said JapanConsuming's Causton.
Yahoo
5 days ago
- Business
- Yahoo
Japan provides reality check for Couche-Tard's grand retail dream
By Anton Bridge, Makiko Yamazaki and Ritsuko Shimizu TOKYO (Reuters) -Alimentation Couche-Tard's attempt to create a global convenience store behemoth was set back when it pulled its $46 billion bid for Seven & i, whose consumers in Japan have emotional ties to their purveyor of rice balls. The Canadian company, which owns Circle-K, withdrew its bid on Thursday after a year-long pursuit, citing "a calculated campaign of obfuscation and delay" by the Seven-Eleven operator and lack of engagement by its founding Ito family. Couche-Tard first disclosed the proposal in August last year, with Seven & i under pressure from shareholders to boost returns by selling off assets and focusing on its mainstay convenience store business. "ACT bid at just the right time... when Seven was at its weakest," said Michael Causton of consultancy JapanConsuming. The possibility of a takeover quickly sparked concern about whether the Seven-Eleven operator's fresh food would be affected. It also generated debate about Japan's openness to foreign takeovers. Convenience stores are an important resource in Japan during natural disasters, but Seven-Eleven's massive global presence made it a target for Couche-Tard. With Seven & i looking to avoid a takeover, it changed its self-reported national security category to "core" in September, a step which raised questions as to whether it was a defensive manoeuvre. In private, it emphasised its importance to Japan's economic security to the government, three sources familiar with the matter said. Seven & i declined to comment. The Canadian company hiked its proposal price in October, with Seven & i revealing plans to hive off assets the same month. The Japanese firm also announced plans to list its North America business. "It has sparked the management into being more proactive," said Lorraine Tan, an analyst at Morningstar. The company had expressed concerns about the regulatory hurdles to a deal. "Couche-Tard seemed to want to iron out the details after Seven & i had agreed to the deal," said Travis Lundy, an analyst who publishes on Smartkarma. PROLONGED NEGOTIATIONS Couche-Tard's approach appeared to gain a tailwind when an attempt by the Ito founding family to buy Seven & i collapsed in February after failing to secure funding. Then, after initially providing little public explanation for pursuing the deal, Couche-Tard in March made a publicity push for the combination emphasising its financial credentials. However, the Canadian retailer faced growing challenges including lacklustre retail spending in the U.S., with its stock price sliding between the end of last year and Wednesday's close. "Couche-Tard may have realised that the cost cannot justify the risks, including prolonged negotiations and uncertain business prospects," said Tatsunori Kawai, chief strategist at Mitsubishi UFJ eSmart Securities. Its shares jumped 8% on Thursday after withdrawing the bid. "To continue further... would ultimately be a lost opportunity for its own growth," said Takahiro Kazahaya, an analyst at UBS. Analysts are also questioning how Seven & i, famed for its ready meals, will drive further growth. On Thursday, Natsuko Douglas, an analyst at Macquarie Capital, downgraded Seven & i to neutral from outperform, citing unclear benefits from the planned listing of the North America business. "Full recovery is a long time away," she wrote in a note. The planned listing is "something they probably don't want to do but were prepared to do to get rid of Couche-Tard," said Tom Leske, director at Churchill Capital. Industry experts point to Seven & i's strengths, honed over decades in Japan's bruising retail market, which has proved tough for many foreign entrants. "Seven globally will be giving competitors a hard time once it has its ducks in a row," said JapanConsuming's Causton.
National Post
7 days ago
- Business
- National Post
Quebec's Couche-Tard ends bid for 7-Eleven parent company over 'lack of good faith engagement'
Article content That October, Seven & i said it received a revised pitch from Couche-Tard. Media reports suggested the new offer valued Seven & i at US$47 billion, about 22 per cent higher than an offer of $38.6 billion Couche-Tard made in August. Article content The Japanese company appeared to be poised to rebuff that offer as well, when a member of the Ito family put forward a new management buyout proposal. Article content That proposal failed to secure financing, improving Couche-Tard's odds at a deal, but Seven & i maintained it had several worries. Article content The main one was that it would be too hard to nab regulatory approvals for an acquisition because some would see the deal as reducing competition across several markets. Article content Couche-Tard wasn't giving up. Article content It said Wednesday that in December it offered a compelling reverse termination fee which represented approximately $1.2 billion in value, increasing to over $1.4 billion if the Federal Trade Commission indicated that additional stores would need to be divested. Article content In January, it submitted a revised, yen-based, non-binding proposal to fulfill a request from Seven & i seeking proof of its continued interest in a deal. The moves got Seven & i to agree to collaborate on assembling a portfolio of stores the companies could divest to appease regulators. Article content Keen to get a deal done, Couche-Tard said it told Seven & I it was willing to explore a structure where it would acquire 100 per cent of its business outside of Japan and 40 per cent in the country. Article content On July 1, Couche-Tard alleged Seven & I proposed an alternate — Seven & i would 'contribute' 7-Eleven into Couche-Tard in return for equity ownership in the Canadian firm. Article content Couche-Tard said it didn't like the offer because it wouldn't 'deliver the significant premium that was offered to your shareholders in our transaction proposals and, in our view, would undermine the operational prospects of the combined business.' Article content It said it ultimately decided to withdraw its proposal because the Japanese company 'engaged in a calculated campaign of obfuscation and delay, to the great detriment of 7&i and its shareholders.' Article content
Forbes
02-06-2025
- Business
- Forbes
Ito Family's Seven & i Gets Back To Basics To Ward Off $47 Billion Takeover Bid From Circle K Owner
KAZUHIRO NOGI/AFP via Getty Images This story is part of Forbes' coverage of Japan's Richest 2025. See the full list here. Facing activist investors and an unsolicited bid of nearly $50 billion from Canadian retailer Alimentation Couche-Tard (ACT), Seven & i Holdings, owner of the 7-Eleven convenience store chain, announced measures in March to improve profitability. ss They include a ¥2 trillion ($14 billion) share buyback through 2030; plans to list its U.S. 7-Eleven stores in 2026; and the sale of non-core retail assets to U.S. PE firm Bain Capital for ¥815 billion. Ito family heir, Junro, son of late founder Masatoshi, was promoted to chairman from vice president and retail veteran Stephen Dacus was brought on board as the company's first non-Japanese CEO. The $69 billion in revenue ACT, which has about 17,000 Circle K and other stores globally, was reported to have initially made a $39 billion bid for Seven & i last August before revising it upward in January. Seven & i, which had roughly 87,000 outlets worldwide and revenue of nearly ¥12 trillion in the year through February, rejected the improved offer but in May agreed to open its books to ACT. Any deal would be one of the largest foreign takeovers of a Japanese company.
