Latest news with #convenience store
CNA
2 days ago
- Business
- CNA
Japan provides reality check for Couche-Tard's grand retail dream
TOKYO :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 per cent 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.
Reuters
2 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.
CNA
3 days ago
- Business
- CNA
US$46b deal collapses - what doomed Couche-Tard's 7-Eleven takeover?
Canada's Alimentation Couche-Tard on Thursday (17 Jul) pulled its US$46 billion bid to buy Seven & i Holdings – a deal that would have been Japan's largest ever foreign buyout. Couche-Tard, which operates Circle K, spent a year trying to create a global convenience store giant by acquiring the company behind 7-Eleven. CNA's Roland Lim breaks down the abandoned acquisition, which according to Dealogic data, is the largest ever proposed corporate buyout to fall apart in the Asia-Pacific region.
Bloomberg
3 days ago
- Business
- Bloomberg
Couche-Tard Got Seven & i Wrong From the Start
Convenience store aficionados of the world, relax. Your perfect egg sandwich is safe, for now. The primary concern for millions of Japanese around the ¥6.77 trillion ($45.8 billion) bid for Seven & i Holdings Co. was that Canada's Alimentation Couche-Tard Inc. would, in search of improving shareholder value, destroy the customer experience that has made the Japanese convenience store, or conbini, a global sensation. That threat seems to have faded after Couche-Tard on Thursday abandoned its bid, citing a lack of 'sincere or constructive engagement.'
Yahoo
3 days ago
- Business
- Yahoo
Canadian retail giant scraps $47 billion bid for 7-Eleven owner
Canadian retailer Alimentation Couche-Tard on Thursday pulled its $47 billion bid to buy Seven & i Holdings, citing a lack of constructive engagement by the Japanese retailer. The surprise move ends what could have been the largest foreign takeover of a Japanese company as Circle K operator Couche-Tard sought to create a global convenience store giant by acquiring the company behind 7-Eleven. 'There has been no sincere or constructive engagement from 7&i that would facilitate the advancement of any proposal, contrary to comments made publicly by 7&i representatives,' Couche-Tard said in a letter to its board of directors. 'Rather, you have engaged in a calculated campaign of obfuscation and delay, to the great detriment of 7&i and its shareholders,' the letter said. Seven & i said in a statement that 'while we are disappointed by ACT's decision, and disagree with their numerous mischaracterizations, we are not surprised.' Seven & i is widely seen as a test case for corporate Japan's openness to foreign takeovers. The withdrawal came after Nippon Steel was able to acquire US Steel in a contentious $14.9 billion transaction. Seven & i shares fell 9% in morning trading in Tokyo. 'We are very disappointed in what appears to be a lack of willingness to engage from Seven & i,' said Manoj Jain, co-founder and co-CIO of Hong Kong-based Maso Capital. 'We believe there is significant value to be realized in a combination and have expressed this view to the management and the board.' Couche-Tard raised its offer to about $47 billion last year and in March offered to increase it further if the Japanese firm cooperated and revealed more financial information. It was also working with Seven & i on a store sale plan, in a bid to ease some regulatory hurdles. Couche-Tard's approach appeared to be gathering steam after a white-knight bid from Seven & i's founding Ito family ended after failing to get financing. Couche-Tard said it had sought to speak to the family but found them unwilling to engage. The two companies inked a non-disclosure agreement (NDA) but 'the quantity and substance of the permitted due diligence, including at two tightly constrained management meetings, have been negligible,' Couche-Tard said in the letter. Alternative proposals Couche-Tard said it believed a full combination of the two companies would maximize value for shareholders but had also explored alternatives. The retailer said it had proposed acquiring all of 7&i's business outside of Japan and 40% of the business in Japan, where convenience stores are seen as key infrastructure due to their support role during natural disasters. 'We are not able to effectively pursue this combination without deeper and genuine further engagement from 7&i leadership and the special committee,' the letter said. Seven & i proposed selling its international business to Couche-Tard in return for a stake in the Canadian retailer, the letter said. Such a deal 'would not deliver the significant premium that was offered to your shareholders in our transaction proposals,' the letter said. Seven & i, whose first foreign CEO Stephen Dacus took the role in May, has been under intense pressure to improve its lackluster earnings and demonstrate it can grow independently. 'We remain fully committed to our standalone value creation plan, which we have been pursing in parallel,' said Seven & i. The retailer has announced a share buyback, is selling off non-core assets and plans to list its North American convenience store business. 'It shows you can drag out the process to avoid being bought out,' said an investor in Seven & i, who spoke on condition of anonymity. Given how long Couche-Tard's process has taken I can't see anyone else coming in with a bid,' the investor added. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
