Seven & i Weighs Buyout Offers Amid Operating Profit Decline

January 10, 2025

The global convenience-store retailer Seven & i Holdings Co. is at a critical juncture, evaluating buyout proposals while grappling with a decline in operating profit. During an online earnings briefing, CFO Yoshimichi Maruyama discussed the current status of proposals from Alimentation Couche-Tard and the company’s founding Ito family. Despite the proposals being reviewed by a special committee, Maruyama stated that there is not enough information yet to make a final decision.

The acquisition discussions began in August when Couche-Tard proposed purchasing Seven & i for $14.86 per share, totaling around $39 billion. Seven & i rejected this offer twice, asserting that it undervalued the company. Couche-Tard then raised its bid to $18.19 per share, equating to approximately $47.2 billion in October. Concurrently, the Ito family, along with stakeholders like Itochu Corp. and various banks, is contemplating a management buyout valuing Seven & i at over $58 billion. This proposal includes the potential for a North American convenience-store business IPO to facilitate financing.

Maruyama acknowledged that both offers come with significant challenges that need addressing. The special committee is thoroughly exploring all options to identify the most beneficial path forward. The decision-making timeline is tentatively set for May, coinciding with the general shareholders meeting.

Another possibility for Seven & i is to continue on an independent growth trajectory without accepting any buyout offers. This strategy is hinted at but has not been elaborated on. The debate over internal versus external growth is especially relevant as the company reported a 24% drop in operating profit during the latest quarter, attributed to broader retail sector weaknesses despite some recovery signs in Japan and North America.

The market positions of the involved companies provide additional context. Tokyo-based Seven & i operates an extensive network of convenience stores, superstores, supermarkets, and other services globally, including over 83,000 7-Eleven stores across 19 countries, with 13,000 located in the U.S. and Canada. Laval, Quebec-based Couche-Tard runs more than 16,700 stores in 31 countries, prominently featuring the Circle K and Holiday Stationstores brands in the U.S.

Investor pressure also plays a crucial role in these acquisition discussions. The financial performance and strategic direction of Seven & i are under close scrutiny. The mixed quarterly results complicate the company’s resistance to lucrative buyout offers, which could significantly alter the competitive landscape of the convenience-store industry.

Ultimately, the decision regarding Seven & i’s buyout will depend on the proposed offers’ capacity to enhance both corporate and shareholder value, the practicality of overcoming acquisition hurdles, and the company’s assessment of its potential for independent growth. The anticipated decision, expected by May, will have a substantial impact on Seven & i’s future and the global convenience-store market.

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