7-Eleven’s Founding Family Fails To Secure Funding for Management Buyout, Opening the Door for Couche-Tard

In the latest bit of c-store news to make international headlines, it appears that 7-Eleven’s potential management buyout by the founding Ito family has fallen through. According to CNN, Seven & i Holdings was unable to secure the $58 billion necessary to move forward with the planned buyout by the company’s current major players, opening the door for a further bid from interested Canadian party Alimentation Couche-Tard. CNBC pegged the necessary buyout sum to be at approximately $53.5 billion, showing some contrast as to the necessary numbers.

There was little dispute over the end result, however.

“They [the founding family] have been unable to secure the financing required to submit a definitive proposal to acquire 7&i. As a result, there is no actionable proposal from Mr. Junro Ito and Ito-Kogyo for 7&i to consider at this time,” a company press filing read.

Per CNBC, Junro Ito is Seven & i’s VP and the son of late Masatoshi Ito, founder of the company, and Ito-Kogyo is a company affiliated with the vice president. Ito-Kogyo is also Seven & i’s second-largest stakeholder, holding an 8.2% stake.

Couche-Tard May Return With a Third Offer for 7-Eleven Parent After Buyout Falls Through

Couche-Tard may be considering a third offer after two of its previous bids to buy the 7-Eleven parent were rebuffed.

As The New York Times indicated, the Canadian c-store chain — which runs more than 16,000 Couche-Tard and Circle K locations across North America and Europe — initially bid $38 billion in August, a sum deemed to have “grossly undervalued” the company, according to Seven & i at the time. The following month, Couche-Tard upped the ante to $47 billion, but it still wasn’t enough to close the deal.

Now, with Seven & i shares having tumbled 11% on Feb. 27 alone, analysts suggest that Couche-Tard could be lining up for a third run. Several headwinds remain in place concerning this particular proposal.

First, Japan has been considered “impenetrable” by many onlookers concerning mergers and acquisitions, per the NYT, and 7-Eleven (and the many other Japanese brands beneath Seven & i’s purview) is regarded as a “national treasure,” per the news outlet.

Second, given that Couche-Tard and 7-Eleven are two of America’s largest c-store operators, a merger would likely spark antitrust allegations and investigations. In the aforementioned press release, Seven & i openly outlined this concern while also indicating ongoing talks with Couche-Tard.

It stated, “7&i remains committed to exploring all opportunities to unlock value for shareholders and continues to assess a full range of strategic alternatives, including the proposal from Alimentation Couche-Tard, Inc. (“ACT”). The Special Committee is engaging constructively with ACT to determine if an actionable proposal can be achieved that addresses the serious U.S. antitrust challenges that any such transaction would face.”