Japanese convenience store giant targeted by rival chains

When 7-Eleven’s boss announced this week it had Buyout offer received The incident from the Canadian rival sent shockwaves through Japan.

A Japanese company of this size has never been acquired by a foreign company.

Historically, Japanese companies have been more likely to acquire overseas businesses.

7-Eleven is the world’s largest convenience store chain, with 85,000 stores in 20 countries and regions.

It has been particularly successful in marketing itself as a quick, cheap but delicious meal option, and in places like Japan and Thailand where meals are already abundant.

“We have more stores than McDonald’s or Starbucks,” Seven & i Holdings chief executive Ryuichi Isaka told BBC News before the company received the takeover bid.

About a quarter of the 85,000 stores are in Japan, while about 10,000 are in the United States.

By comparison, Quebec-based Alimentation Couche-Tard operates the Circle K chain, which has nearly 17,000 stores in 31 countries. More than half of its stores are in North America.

Before news of the preliminary takeover bid broke, the approach valued Seven & i at more than $30bn (£23bn).

7-Eleven’s stock price rose more than 20% on Monday, but gave back some of those gains the next day.

Analysts note that the yen’s weakness against the dollar and other major currencies has helped make Seven and One affordable.

Manoj Jain of Hong Kong hedge fund Maso Capital said the Japanese government’s efforts to promote mergers and acquisitions appear to be working as the yen weakens.

However, the proposal is still at a preliminary stage and given the potential size of any deal, it could face scrutiny from competition authorities.

7-Eleven has been keen to capitalize on the popularity of the food it sells – which ranges from rice balls, sandwiches, cooked pasta, fried chicken and dumplings.

In many parts of the world, people can buy a bar of chocolate or a bag of chips at a convenience store in an emergency, but in Japan, stores like 7-Eleven are popular with tourists looking for a treat.

These 7-Eleven dishes have made the chain a social media sensation in Asia.

Going to a 7-Eleven convenience store is even considered one of the hottest things to do in Thailand, with their ham and cheese toast going viral on TikTok.

One of the celebrities who helped raise 7-Eleven’s profile was British singer Ed Sheeran, whose video of him trying out the snacks in a store in Thailand went viral.

Mr. Isaka has been working to repeat that success in the U.S. and European markets as the company faces pressure from investors to sell off parts of the business and focus on the 7-Eleven brand.

The company has been updating its strategy so that more stores can follow the lead of its Japanese stores.

“We found that stores selling fresh food attracted more shoppers,” Mr. Isaka said.

“We want to achieve high-quality growth, not just increase volume. We want to ensure customer satisfaction and increase sales per store while increasing the number of stores,” he added.

Seven and I also went on a shopping spree. In January, the company spent around $1bn (£770m) to acquire more than 200 stores in the US from petrol station chain Sunoco.

In April, it bought back more than 750 stores from an Australian franchisee.

For most of its nearly century-long history, 7-Eleven has been an American brand.

The company began selling ice for cooling refrigerators in 1927 and later stocked essentials such as eggs, milk and bread.

At that time, the store was open from 07:00 to 23:00, hence the name.

As the business grew, 7-Eleven began offering franchises outside the United States.

In 1974, Japanese retail company Ito-Yokado reached an agreement to open Japan’s first 7-Eleven convenience store. In 1991, it acquired 70% of the chain’s American parent company.

Masatoshi Ito, the founder of Ito-Yokado, passed away in 2023 at the age of 98. Transforming 7-Eleven into a global empire.

In 2005, Ito-Yokado changed its name to Seven & i Holdings. The “i” in the name was a tribute to Ito-Yokado and Mr. Ito, who was the honorary chairman of the company at the time.

Now, as the company decides whether to remain Japanese-owned or return to its North American roots, experts are wondering whether more major Japanese companies will become takeover targets.

Jain said that now “Japanese boards and management teams are more willing to accept offshore capital and embrace foreign approaches”.

More foreign investors may now be encouraged to take an interest in Japanese companies, he added.