THE billionaire family behind Seven & i Holdings, owner of 7-Eleven convenience stores, is poised for a massive payday if they support what would be the biggest foreign takeover of a Japanese company.
A vehicle owned by the descendants of Masatoshi Ito is the second-largest shareholder of Seven & i, with an 8.1 per cent stake worth US$3.1 billion through their family vehicle, according to the company’s annual report. The firm said on Monday (Aug 19) that it has received a non-binding buyout proposal from Alimentation Couche-Tard of Canada. Couche-Tard confirmed it made a “friendly” offer.
If the deal goes ahead, it would be a remarkable turn of events for both companies. Couche-Tard’s billionaire co-founder Alain Bouchard first approached Ito about an acquisition in 2005, according to a 2016 interview with Canada’s The Globe and Mail newspaper. Ito rejected the idea, saying both companies needed to improve their standing in the US market before contemplating a merger.
It’s not clear if the Ito clan supports the deal, and they may be unwilling to part with their family legacy, said Michael Causton, co-founder of Tokyo-based JapanConsuming, a research firm focused on the Japanese retail and consumer sector.
“Seven & i is a Japanese institution and a part of Japan’s corporate establishment,” he said. “Selling to a foreign company, and one that is a competitor in North America, is extremely unlikely.”
An external representative for Seven & i said the company would not comment beyond the statement. Couche-Tard did not immediately respond to a request for comment.
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A successful deal would also mark a rare exit by a billionaire family in Japan, a country known for multi-generation businesses.
The Ito clan’s stake is already worth US$866 million more on paper after Seven & i shares jumped a record 23 per cent on Monday in Tokyo. That gives the company a market value of 5.6 trillion yen (S$50 billion). Couche-Tard shares slipped 2.2 per cent in Toronto.
The Japanese group’s founder died last year at the age of 98 with a net worth of US$5 billion, according to the Bloomberg Billionaires Index. His son Junro Ito is an executive vice-president and sits on the board.
Bouchard and Couche-Tard co-founder Jacques D’Amours also built 10-figure fortunes from the convenience store business, with net worths of US$7.8 billion and US$3.9 billion respectively, according to Bloomberg’s wealth index. The company grew from a single suburban Montreal location opened by Bouchard in 1980 to more than 16,700 stores globally via a deal spree that’s seen it snap up rivals including US chain Circle K.
Activist pressure
The late Ito, who was born in 1924, expanded his small family-owned shop into one of Japan’s largest retailers and took 7-Eleven convenience stores global.
Sometimes called the Sam Walton of Japan, Ito was known for a decentralised business style that was influenced by his long friendship with famed management consultant Peter Drucker, who once described Ito as “one of the world’s outstanding entrepreneurs and business builders”.
The company’s empire now spans 85,000 convenience stores, petrol stations and retail outlets worldwide.
It also plays an outsized role in Japan, offering essential services including food and water delivery in times of calamities such as earthquakes, Causton said.
“Seven & i is more than just a retailer; it is part of the backbone of Japanese emergency response services,” he said. “So I don’t see government being supportive of a foreign takeover in this case.”
Until recently, the firm was forging takeovers of its own. In 2020, Seven & i agreed to buy about 3,900 Speedway gas stations and stores from US-based Marathon Petroleum for US$21 billion, at the time its biggest-ever deal.
Seven & i has come under pressure from activist fund ValueAct Capital Management LP over perceptions that its assets could be worth more and to narrow its focus to 7-Eleven stores.
“The company might work even harder to improve the businesses to prove that it is the best owner,” following soft sales lately, Macquarie analysts Natsuko Douglas and Linda Huang wrote in a note. “Management appears to be making efforts to improve these numbers.”
Foreign takeovers of Japanese companies are extremely rare, but recent changes in guidelines for mergers, as well as activist investors pushing companies to boost value, could open the door to a deal that would create a global convenience-store behemoth.
Heirs of Masatoshi Ito own the majority of their Seven & i shares through an investment vehicle that does not disclose individual ownership. Ito and his wife, Nobuko, had three children – Yasuhisa, Hisako and Junro. BLOOMBERG
