The empire of Couche-tard covers about 31 countries with more than 16,700 stores.
The Canadian multinational operator of convenience stores, Couche-Tard is at the verge of dominating the world’s convenience store 7-Eleven as it made an offer to buy one of the sector’s biggest players. This makes the 7-Eleven owner the largest-ever Japanese target of a foreign buyout.
Seven & i Holdings Co.Ltd of Japan which is the owner of 7-Eleven received a non-binding offer from Laval, Que.-based Couche-Tard to acquire all outstanding shares. Although the terms of the proposal were not disclosed, the offer was described as a “friendly, non-binding” which mainly focuses on reaching a mutual agreement that proves to be beneficial for the customers, employees, franchisees and shareholders of both the companies.
This bid marks to be the latest example for the increasing interest of western investors in the Japanese countries which are attracted by the country’s push for better governance.
Seven & I owns a variety of businesses, including supermarkets, food producers, household goods businesses, and financial services organisations, in addition to the well-known 7-Eleven convenience store network in the United States, Japan, and other countries. It even owns an interest in Tower Records Japan.
The empire of Couche-tard covers about 31 countries with more than 16,700 stores although Seven % i operates in 85,800 stores with 157,177 employees worldwide and records about 63.3 million customers per day. The majority of its sales come from its international convenience store operations. By location, it is predominantly American, with North America accounting for three-quarters of revenue.
7-Eleven has a 14.5% market share in the convenience grocery store area in the United States alone, with Couche-Tard’s banners accounting for 4.6%. When combined together the two multinational convenience stores would produce an entity that controls almost a fifth of the market.
It also sheds insight on a retail chain that, despite being started in the United States, has grown into a cultural force under its Japanese parent. Unlike certain American convenience stores, Japanese “konbini” are more akin to mini-supermarkets, selling everything from fresh produce to toiletries and apparel.
The shares of Seven & i surged with the news of the deal by almost 23% in Tokyo, summing up the value of the retailers at about 5.6 trillion yen ($38 billion). Couche-Tard, which operates Circle-K convenience stores, is valued at approximately $58 billion.
A special committee was formed by the Japanese giant to review the proposal. As yet there have been no decisions made by the committee or the board of directors. According to LSEG data, this will be the largest-ever takeover of a Japanese enterprise by an outside entity. This deal even beats Toshiba’s memory chip business by a consortium led by private equity firm Bain which amounted to a $18 billion deal in 2018.
This whole agreement brings Japan into focus for the world. The bid highlights the growing attractiveness of Japanese assets that were long shunned for the investors.
According to Duncan Clark, chairman and founder of investment consulting firm BDA, changes in corporate governance have contributed to a revitalised sense of significance for Japan and Japanese companies.
This year Nikkei hit a series of record highs as investors have applauded governance reform while Japan was home to one of the world’s best performing stock markets last year.
If agreed, the deal would follow Couche-Tard’s $3.3 billion purchase of some of Total Energy’s European petrol stations last year, as well as a $20 billion bid for Europe’s largest food retailer Carrefour, which the French government rejected in 2021 due to food security concerns.
In 2020, Seven & I and Couche-Tard were competing bidders for the U.S. petrol station chain Speedway, which the Japanese business eventually bought for $21 billion.
Instead, the two companies agreed to investigate future operational agreements. The Seven & i transaction would be considerably more significant, transforming Couche-Tard into a “dominant force” and “improving its economies of scale.”