The Canadian owner of Circle K convenience stores wants to buy the Japanese parent company of 7-Eleven for $31 billion.
Seven & i confirmed media reports on Monday that it had received a preliminary bid from Quebec-based conglomerate Alimentation Couche-Tard that would make the 7-Eleven owner the largest-ever Japanese target of a foreign buyout.
While the outcome of the bid is uncertain, news of it sent shares of Seven & i surging by almost 23% in Tokyo, valuing the retailer at around $38 billion.
Couche-Tard, Canada’s largest retailer which operates Circle-K convenience stores, is valued at roughly $58 billion.
Seven & i said Couche-Tard has proposed buying all outstanding shares of the company.
The value of the offer has not been disclosed but the proposal highlights growing investor interest in Japanese assets, which has propelled Japan’s stock market to recent record highs.
Seven & i employs some 77,000 people worldwide, according to LSEG data, and the bulk of its sales come from its overseas convenience store business.
By geography, it is overwhelmingly American, with North America contributing three-quarters of revenue.
The retail giant has formed a special committee to review the proposal, it said in a statement, adding no decision has been made by either the committee or its board of directors.
The announcement followed a report on the bid by the Nikkei newspaper.
Alimentation Couche-Tard did not immediately respond to a request for comment outside of usual working hours.
The talks are “at a very early stage”, said one of the sources.
The deal, if agreed, would follow Couche-Tard’s $3.3 billion purchase of some of TotalEnergies’ European gas stations last year and a $20 billion bid for Europe’s largest food retailer Carrefour which was rejected in 2021 by the French government on food security concerns.
In 2020, Seven & i and Couche Tard were rival bidders to take over American gas station chain Speedway, which the Japanese company ended up purchasing for $21 billion.
A deal for the whole company would be the largest ever buyout of a Japanese firm by an overseas company, LSEG data shows, beating the $18 billion deal in 2018 for Toshiba’s memory chip business by a consortium led by private equity firm Bain.
The 7-Eleven operator has been on a push to bolster its flagship convenience store chain globally, part of a larger restructuring that has seen it sell off some lower-performing assets in the wake of pressure from shareholder ValueAct Capital about its asset allocation.
Since last year, it has announced the closure of dozens of Ito-Yokado supermarkets, exited its apparel business, and completed the sale of its Sogo & Seibu department store unit.
Couche-Tard is not expected to have an easy time clinching a deal however.
“I strongly doubt that this takeover proposal will come to fruition, especially considering Seven & i’s resistance to divesting even their legacy businesses,” said Oshadhi Kumarasiri, a LightStream Research analyst who covers Seven & i and publishes on Smartkarma.
“Unless the offer comes with a substantial premium over Seven & i’s recent highs, it seems improbable that the management would even consider this idea.”
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