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Mergers & Acquisitions

7-Eleven Parent Dropping Bid for Speedway: Report

Seven & i balking on price, fear of economic slowdown related to coronavirus
Photograph courtesy of Marathon Petroleum Corp.

TOKYO — Seven & i Holdings Co. Ltd., the parent company of 7-Eleven Inc., is dropping its plan to acquire the Speedway convenience-store chain in the United States for about $22 billion, according to a report by the Nikkei Asian Review.

Speedway, a division of Marathon Petroleum Corp., operates approximately 4,000 c-stores.

Seven & i made the decision in a board meeting on Thursday, the report said, citing several sources involved in the negotiation between Tokyo-based Seven & i and Findlay, Ohio-based Marathon Petroleum.

Seven & i considered the price to be too high, the sources said. There was a risk of incurring a large loss if Speedway's revenue did not go up as expected after the acquisition. It also cited growing concerns about a global economic slowdown from the coronavirus and the decline of brick-and-mortar retail as online shopping expands, a Bloomberg report also said.

Investors had been worried about the Speedway purchase since news of the negotiations broke Feb. 20, an earlier Nikkei report said. Seven & i shares declined on the news.

Seven & i declined to comment to the newspaper. Irving, Texas-based 7-Eleven Inc. did not respond to a CSP Daily News request for comment by posting time. In response to a CSP Daily News inquiry, a Marathon Petroleum spokesperson said, "Marathon Petroleum Corp. does not provide comment on speculation. We continue with our plans to separate Speedway, targeting the fourth quarter of this year for completion of the transaction."

7-Eleven is No. 1 on the Top 40 update to CSP’s2019 Top 202 ranking of U.S. c-store chains by number of retail outlets, with more than 9,360 c-stores in the United States. The acquisition of Speedway, which is No. 3 on CSP's list with more than 3,900 locations, would have cemented 7-Eleven's position as the leading U.S. c-store retailer, creating a portfolio of more than 13,260 stores.

Seven & i, Japan’s largest c-store operator, has more than 69,000 stores in 18 markets globally. Along with its U.S. locations, 7-Eleven operates, franchises or licenses more than 70,000 stores in 17 countries.

Prompted by activist investors, as well as an ongoing evaluation of its business units, Marathon Petroleum began a strategic review of Speedway in 2017. Based on a recommendation from an independent committee, Marathon Petroleum decided to keep Speedway as an integrated business unit. By late 2019, however, continuing investor pressure and changes in the marketplace prompted Marathon Petroleum to decide to spin off the retail unit into an independent, publicly traded company. In late January, Marathon Petroleum also began exploring a sale of Speedway rather than a spinoff, and it has attracted several major buyers.

Along with Seven & i, TDR Capital, a private equity firm connected to Blackburn, U.K.-based c-store retailer EG Group, was also reportedly considering a bid for the Enon, Ohio-based chain. EG Group, through Westborough, Mass.-based EG America, owns more than 1,675 c-stores in the United States, including Cumberland Farms. It is No. 6 on CSP's Top 202 list.

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