Seven & i Holdings, the parent company of global convenience store chain 7-Eleven, has finally opened negotiations with Canada’s Alimentation Couche-Tard (ACT) over a potential $47 billion takeover bid after months of stalling.
This move comes just as the Japanese retailer received a rival buyout proposal from members of its founding Ito family, who have emerged as a potential “white knight” bidder.
The ACT bid, the latest in a decades-long interest from the Canadian firm to acquire Seven & i, was increased to $47 billion in September following a previous $39 billion offer, which was rejected for undervaluing the Japanese company. If successful, the acquisition would be the largest foreign takeover of a Japanese company to date.
The talks between Seven & i and ACT’s advisors are reported to be “preliminary and limited,” but they mark a significant shift from the Japanese firm’s previous stance of resistance. The surprise counteroffer from the founding Ito family, announced on Wednesday in a statement to the Tokyo Stock Exchange, adds a fresh dimension to an already high-stakes deal.
Led by Vice President Junro Ito and his firm, Ito Kogyo, the founding family’s proposal remains “confidential and non-binding,” according to Seven & i’s announcement. The Ito family, which collectively holds a 3.5% stake in the company, has previously voiced opposition to a foreign takeover and is now seeking Japanese partners and banks to fund an alternative deal that would keep the business under domestic control.
While the family has not disclosed a specific price, sources say the proposal could require unprecedented levels of borrowing from Japan’s largest banks, with potential equity support from the trading giant Itochu. Although Itochu, the owner of rival chain FamilyMart, has not confirmed its involvement, sources indicate it may be considering joining the Ito family’s bid. Any resulting acquisition could result in one entity controlling over 65% of Japan’s convenience store market, a consolidation that could face regulatory scrutiny.
This evolving bidding war underscores a broader transformation within Japan’s mergers and acquisitions market, where previously rare hostile and foreign takeovers are becoming more prevalent. Corporate governance reforms in Japan have led to an increase in investor activism, pressuring large conglomerates like Seven & i to streamline operations and divest unprofitable businesses.
Earlier this year, Seven & i divested from its struggling department-store operator Sogo & Seibu, and is considering listing its supermarket business. The company has also laid out plans to split its business, separating the convenience store and fuel station operations from its less profitable retail divisions.
Stephen Dacus, Chair of Seven & i’s special committee, emphasized that the board is committed to a comprehensive review of all options to maximize shareholder value.
“We are considering proposals from Mr. Ito and Ito Kogyo, from ACT, as well as the company’s standalone opportunities,” Dacus said in a statement on Wednesday.
If ACT’s takeover succeeds, it would secure ACT as a dominant player in the global convenience store market, adding to its portfolio, which includes Circle K stores. However, the Ito family’s bid, if successful, would keep 7-Eleven’s operations largely under Japanese ownership, avoiding potential regulatory hurdles and assuaging concerns about the country’s largest retailer falling into foreign hands.
Experts believe that ACT’s acquisition could face significant regulatory challenges, particularly given the dominance of 7-Eleven in Japan. The proposed alternative from the Ito family, backed by Japanese megabanks Sumitomo Mitsui, Mitsubishi UFJ, and Mizuho, would also be the largest-ever management buyout in Japan if it proceeds, potentially valued at up to ¥9 trillion ($58 billion).
Both ACT and the Ito family have yet to publicly comment on the ongoing talks.
With input from the Financial Times, Bloomberg, and the Wall Street Journal.
