7-Eleven is a hard target for Couche-Tard’s takeover bid
In Japan, convenience stores have a special place in the hearts of people. They are bright and clean, and they stock up on fresh, affordable lunchboxes as well as steamed buns and winter stews. For many residents, the cheerful, jingle filled stores known as konbini are an essential part of their daily lives. Millions flock to the stores daily to pick up food, send packages and pay bills.
Japan’s largest konbini chain, 7-Eleven, is also its most famous. It is understandable that a rival company wants in on the action.
This week, Seven & i Holdings, the Japanese company that operates 7-Eleven, said it had received an unsolicited takeover proposal from Alimentation Couche-Tard, a convenience store giant in Canada.
The status of 7-Eleven stores as a cornerstone of Japanese society also means Japan probably will not be willing to part with them, despite increasing pressure on the nation’s corporations to demonstrate openness to foreign-led acquisitions.
7-Eleven is “one of the best brick-and-mortar retail businesses in the world,” said Hiroaki Watanabe, an independent retail analyst. Couche-Tard is a Canadian convenience store giant that has made an unsolicited takeover offer to Seven & i Holdings, the Japanese company that operates 7-Eleven. It opened its first Japanese store in 1974 with popular American foods like hamburgers. In 1991, 7-Eleven Japan and a Japanese supermarket operator Ito-Yokado acquired 70 percent of Southland shares. Seven & i, a holding company that owned 7-Eleven, became the sole Japanese owner in 2005. Seven & i is exploring ways to replicate Japan’s coveted convenience store experience in the United States. North American convenience shops are not as popular as Japanese konbini stores. Instead, they sell packaged snacks, drinks, and in many cases gasoline. Convenience-store hot foods typically evoke images of a solitary hot dog spinning for hours on end in an induction oven.
Couche-Tard, based in Quebec, operates many of these convenience stores in the United States under its Circle K brand.
The company runs more than 16,000 stores and gas stations in North America and Europe. The Canadian retailer, like Seven & i has also sought to expand abroad. Couche-Tard has always had a global focus on Japan. Should Couche-Tard’s acquisition succeed, it would not only represent the largest foreign-led acquisition of a Japanese company but also create one of the world’s largest retail groups.
After news of Couche-Tard’s preliminary takeover bid, Seven & i announced that it had established an independent special committee to review the offer.
Analysts point to significant obstacles that would probably make the buyout of Seven & i a long shot.
For one, Seven & i is a conglomerate with businesses beyond convenience stores, including banking and carrier services. The holding company’s reach opens the acquisition to more intense scrutiny from the Japanese government.
There are also big differences in the way Couche-Tard and Seven & i operate convenience stores.
Japanese konbini operators are known for their swift development of new products — such as themed goods available only during the fleeting cherry-blossom season. According to Mr. Watanabe the analyst, a typical convenience store in Japan has about 3,000 items, of which 70% are replaced every year. Watanabe studied convenience stores on a two-week trip across the United States. He was not impressed. The first 7-Eleven in Japan opened its doors in 1974, in a quiet bayside neighbourhood in eastern Tokyo. It was crowded with office workers, students, and parents with small children on Friday morning. The foods at 7-Eleven have a taste that feels “familiar” to her and her colleagues, she said.
Outside a 7-Eleven in central
Tokyo, Yuta Matsumura, a 26-year-old office worker, ate a cream-filled pancake dessert he had just bought. He said that he usually stopped at 7-Eleven three times a day, sometimes for lunch items such as beef rice bowls. “They are not too sweet like we Japanese prefer,” he said. “7-Eleven’s desserts are the best.”
