Couche-Tard’s more than $47 billion potential takeover of Seven & i, or the acquisition by any foreign company, would be “heavily related” to national security, Ryosei Akazawa, Japan’s minister in charge of economic revitalization, said on Wednesday, according to a Reuters report. Seven & i has rejected Couche-Tard’s advances, and that national security factor could be an impediment to a foreign acquisition.
In August, following rival Couche-Tard’s initial bid, Tokyo-based global convenience-store company Seven & i Holdings Co. Ltd. filed to change its “non-core” business status to “core” status under Japanese law.
Core status requires any foreign entity to give prior notification of share purchases in a core company of more than 10%. It puts Seven & i in the same category as a defense contractor or energy company. In September, Japan’s Ministry of Finance, under the country’s Foreign Exchange and Foreign Trade Act, added Seven & i to the list of companies classified as “core” to the country’s national security.
Industry observers saw the move as a hurdle intended to block any foreign takeover. But in September, Japan’s finance minister, Shunichi Suzuki, said, “We can’t say the core classification makes a buyout more difficult.”
Foreign entities seeking to buy a stake of 1% or more in the Japanese firm must in file for a national security review with the Japanese government. It is mandatory “regardless of whether [a business is] categorized as core or non-core.”
The current acquisition effort began in August, when Couche-Tard submitted a proposal, $14.86 per share or approximately $39 billion, to acquire Seven & i, which has rejected the proposal twice, saying it “undervalues” the company.
Laval, Quebec-based Couche-Tard in October then raised its offer to $18.19 per share or approximately $47.2 billion.
The company is also considering a management buyout with funding from banks, Itochu Corp. and the founding Ito family in a deal that could be worth more than $58 billion. The proposed management buyout includes plans for an initial public offering (IPO) of the North American c-store business to ease financing concerns.
At the Japan National Press Club on Wednesday, Akazawa said, “Speaking about a potential acquisition of Seven & i, I think the matter is heavily related to [national] security,” according to Reuters.
Akazawa said convenience stores and their distribution networks could be used in the event of disaster to help bring hot food to people in affected regions, for example.
“If Seven & i’s convenience-store business is in foreign hands and run solely for profits, we’ll have to think about various things, such as whether we can we get full support when our people affected by the disaster are suffering,” he said.
Seven & i did not respond to a CSP request for comment. Couche-Tard declined to comment.
7-Eleven is No. 1 on CSP’s 2024 Top 202 ranking of U.S. c-store chains by store count. Alimentation Couche-Tard is No. 2.
Seven & i, parent of 7-Eleven Inc., is a global operator of convenience stores, superstores, supermarkets, specialty stores, foodservices, financial services and IT services. Irving, Texas-based 7-Eleven Inc. operates, franchises or licenses more than 83,000 convenience stores in 19 countries and regions, including more than 13,000 7-Eleven convenience stores in the United States.
Laval, Quebec-based Couche-Tard operates in 31 countries and territories, with more than 16,700 stores. Its network includes more than 7,100 stores in the United States under the Circle K and Holiday Stationstores banners, and approximately 2,100 in Canada under the Circle K and Couche-Tard banners.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.