The Japanese retail giant Seven & i Holdings, owner of the global convenience store chain 7-Eleven, has rejected a $38 billion takeover bid from Canadian rival Alimentation Couche-Tard (ACT). The bid, which sought to combine two of the world’s largest convenience store operators, was seen as undervaluing the company and carrying substantial regulatory risk, according to Seven & i’s board.
Despite the rejection, Seven & i has indicated that it remains open to negotiations and would consider an improved offer. If successful, the deal would create a colossal convenience store empire, boasting over 100,000 locations worldwide.
In a letter addressed to Alimentation Couche-Tard, Stephen Dacus, the chair of the Seven & i board overseeing the offer, stated that the $38 billion bid “grossly undervalues” the company. Seven & i, which operates 85,000 stores under the 7-Eleven brand across 20 countries, sees significant future potential in its growth strategy and believes the initial offer did not adequately reflect that value. The board also highlighted the proposal’s “opportunistically timed” nature, referencing the current weakness of the Japanese yen relative to the U.S. dollar, which made the company more affordable to foreign buyers.
The timing of the offer, combined with significant regulatory hurdles, also raised concerns. Seven & i warned that the proposed deal would likely face “multiple and significant challenges” from U.S. competition regulators. The potential merger of two dominant convenience store chains would require approval from antitrust authorities, particularly in the United States, where both companies already have substantial market shares. Such scrutiny could prolong or even block the deal altogether.
ACT’s Ambitious Expansion Plans
Alimentation Couche-Tard (ACT), based in Quebec, Canada, operates around 17,000 stores under the Circle K and Couche-Tard brands, primarily in North America, Europe, and parts of Asia. The company is no stranger to acquisitions and has grown significantly through its strategy of buying out competitors in the convenience store industry.
If the takeover were successful, ACT’s footprint would more than double in North America, with its presence expanding to 20,000 sites across the U.S. and Canada alone. This would solidify its position as one of the largest convenience store operators globally. However, acquiring Seven & i, which controls the world’s largest convenience store chain, would mark the first time a Japanese company of this size has been bought by a foreign firm, underscoring the bold nature of the proposal.
The initial bid offered by ACT valued Seven & i at $14.86 per share, a figure 20% higher than its stock price before the offer was publicly announced. Yet, the board of Seven & i maintained that the offer did not fully reflect the company’s value or the strategic advantages it could generate for shareholders in the long term.
Japan’s Shifting Attitude Toward Foreign Investment
Historically, Japanese companies have been more inclined to acquire foreign firms rather than being bought by international competitors. A deal of this magnitude would represent a significant shift in Japan’s approach to mergers and acquisitions. Neil Newman, head of strategy at Astris Advisory Japan, noted that “Japan needs to protect its national assets… and Seven & i is a major asset.” He added that the negotiation process would likely be “long and drawn-out,” given the complexity and high stakes involved.
Nonetheless, Japan has shown signs of a more open attitude toward foreign investment in recent years. In 2023, the Japanese government issued new guidelines on mergers and acquisitions, urging companies not to reject credible takeover offers without sincere consideration. This move is part of a broader effort to attract more foreign investment to Japan, which could help revitalize certain industries and stimulate economic growth.
Should the Seven & i and ACT deal ultimately succeed, it would send a powerful message that Japan is open to foreign business and investment, even for its most significant corporate players. However, the outcome remains uncertain as both parties continue to evaluate their next steps.
Seven & i’s rejection of the offer has already stirred reactions within the retail and convenience store industries. Analysts have pointed to the potential benefits of the merger, including cost synergies, supply chain optimization, and greater market reach. However, the deal’s complexity, particularly regarding regulatory oversight and labor concerns, has cast a shadow over its feasibility.
In rejecting the offer, Seven & i also took into account concerns from labor unions and local stakeholders. In Japan, 7-Eleven stores are seen as critical components of local communities, and any changes in ownership could potentially affect jobs and operations. Similar concerns have been raised in the U.S., where both ACT and Seven & i have a significant presence.
Although ACT has expressed willingness to invest billions of dollars in Seven & i beyond the deal’s initial terms, the exact nature of these investments and how they would affect existing operations remain unclear. ACT has yet to publicly comment on the rejection of its bid but has hinted that it may revise its offer or continue negotiations in hopes of reaching an agreement.
The Road Ahead for Seven & i and ACT
The rejection of the $38 billion offer does not necessarily mark the end of negotiations between Seven & i and ACT. Both companies have left the door open for future discussions, with Seven & i signaling that it is willing to consider a better proposal that addresses its valuation and regulatory concerns.
For now, the global retail industry is watching closely to see how this high-stakes corporate chess match will play out. Whether the two companies ultimately strike a deal or the acquisition falls apart, the outcome could reshape the landscape of the convenience store industry for years to come.
