By T. Jayani, JadeTimes News
When the owner of 7-Eleven revealed this week that it had received a buyout offer from a Canadian competitor, it sent shockwaves through Japan. It's unprecedented for a Japanese company of this magnitude to be acquired by a foreign entity. Traditionally, Japanese firms have been the ones purchasing businesses overseas.
7-Eleven, the world’s largest convenience store chain with 85,000 outlets across 20 countries, has excelled at positioning itself as a go to for quick, affordable, and tasty meals, even in markets like Japan and Thailand, where such options are plentiful. "We have more stores than McDonald's or Starbucks," stated Ryuichi Isaka, CEO of Seven & i Holdings, before the buyout offer surfaced. Approximately a quarter of 7-Eleven’s stores are located in Japan, with around 10,000 in the United States.
The prospective buyer, Quebec based Alimentation Couche Tard, operates the Circle K chain, which has nearly 17,000 stores in 31 countries, with more than half in North America. The initial offer valued Seven & i at over $30 billion (£23 billion), sparking a more than 20% surge in 7-Eleven's stock on Monday, though it did retreat slightly the next day.
Analysts attribute the affordability of Seven & i to the weakening Japanese yen against the US dollar and other major currencies. Additionally, Japanese government initiatives to encourage mergers and acquisitions seem to be bearing fruit, according to Manoj Jain of Hong Kong based hedge fund Maso Capital. However, this proposal is still in its early stages, and due to the potential size of the deal, it might undergo scrutiny from competition regulators.
7-Eleven has successfully leveraged the popularity of its diverse food offerings, including rice balls, sandwiches, pasta, fried chicken, and dumplings. While convenience stores in many countries are associated with quick snacks, in Japan, 7-Eleven stores are frequented by those seeking culinary treats. This popularity has even turned 7-Eleven into a social media sensation in Asia. In Thailand, the chain's ham and cheese toastie has become a TikTok phenomenon, and celebrities like British singer Ed Sheeran have further boosted its profile by sharing their experiences trying 7-Eleven snacks.
Mr. Isaka has aimed to replicate this success in the US and Europe, especially as investors push the company to focus more on the 7-Eleven brand and divest other businesses. The company has been updating its strategy, with plans to have more stores emulate the Japanese model. "We’ve found that stores offering fresh food are attracting more customers," Isaka noted, emphasizing a strategy focused on quality over quantity, increasing both customer satisfaction and individual store sales while expanding the number of stores.
Despite its global reach, 7-Eleven has American roots, having started in 1927 selling ice blocks to keep refrigerators cool before expanding to offer essentials like eggs, milk, and bread. The name "7-Eleven" originated from the store's operating hours, 7:00 AM to 11:00 PM. The first 7-Eleven outside the US opened in Japan in 1974 after a deal with Japanese retail firm Ito Yokado, which later acquired a 70% stake in the chain's US parent company in 1991. Masatoshi Ito, the founder of Ito Yokado, is widely credited with transforming 7-Eleven into a global powerhouse. The company was renamed Seven & i Holdings in 2005, with the "i" in its name honoring Ito Yokado and Mr. Ito, who had become the company's honorary chairman.
As Seven & i deliberates whether to remain under Japanese ownership or return to North American control, experts are considering the possibility of other large Japanese companies becoming takeover targets. According to Jain, there is now a "greater willingness among Japanese boards and management teams to accept offshore capital and consider foreign acquisition offers," potentially encouraging more foreign investors to pursue Japanese firms.
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