Tokyo
Reuters —
Seven & I Holdings, known for its 7-Eleven convenience stores, has made a significant change by appointing its first foreign CEO to lead the company amid a $47 billion takeover bid and a drive for recovery.
After six intense months following a buyout offer from the Canadian company Alimentation Couche-Tard, Seven & I announced a major restructuring of its leadership and business operations.
Stephen Dacus, the lead outside director, will take over as CEO on May 27, replacing Ryuichi Isaka.
Speaking to reporters in both Japanese and English, Dacus mentioned ongoing discussions with Couche-Tard, but noted that merging faces significant regulatory challenges.
He expressed concern about prolonged uncertainty impacting shareholders, stating, “I don’t think our shareholders would want us to spend two years waiting just for a potential rejection.”
Seven & I operates over 80,000 7-Eleven stores globally. The company also revealed its plans to sell its superstore division to Bain Capital for approximately 814.7 billion yen (around $5.5 billion) and to reduce its stake in Seven Bank to below 40%.
Additionally, the company plans a share buyback worth 2 trillion yen (about $13.5 billion) through fiscal year 2030. They also aim to list their North American convenience store division by mid-2026.
Criticism has surrounded Seven & I regarding its capital management. The company received the takeover offer from ACT in August, which was later increased to $47 billion.
A group led by Seven & I’s founding Ito family attempted its own buyout proposal as the management sought a path towards independent recovery.
Dacus related to 7-Eleven franchisees, recalling his father’s experience as one and sharing that he worked in a store during his teenage years.
Dacus, who has held executive positions at Walmart and Fast Retailing, previously led the committee evaluating the takeover offers. The Ito family’s initiative fell short of securing the reported $58 billion needed for its bid, which ended last month.
Following these changes, shares of Seven & I shot up by 6.1% after news of the buyback plan circulated.
Analysts view the buyback as a strategy to enhance market value and counter Couche-Tard’s interest. However, concerns arise over how the buybacks and dividends will be funded, with some suggesting borrowing could be necessary.
Some experts believe Seven & I’s restructuring may not deter ACT’s bid. As their divestments center primarily around convenience stores, which ACT seeks, there could still be opportunities for negotiations.
Bain Capital has announced plans to list its superstore division, York Holdings, within three years after it expands through acquisitions.
Seven & I has transformed the traditional 7-Eleven into a popular dining option in Japan, offering fresh sandwiches, rice balls, and ready-to-eat meals, which changed eating habits for many.
Isaka, who has been with Seven & I since 1980 and became its president in 2016, faced criticism over his management style. In 2023, he was challenged by investors, including ValueAct Capital, for what they considered ineffective strategies.
Under Isaka’s leadership, the company made significant acquisitions, including a $21 billion deal for Speedway gas stations in 2020, expanding its presence in North America. However, some analysts believe this acquisition was overpriced and contributed to the company’s challenges, particularly with low-margin businesses in Japan.
Isaka’s approach prompted some to say the company jumped into the global market too soon without a solid domestic foundation.
Recently, US-based Artisan Partners pushed for a competitive bidding process for any takeover proposals.
In October, Isaka unveiled a turnaround plan aimed at doubling sales to 30 trillion yen by 2030, focusing on overseas growth and fresh food offerings.
Dacus expressed commitment to this food-centered strategy, highlighting efforts to introduce popular Japanese food items into U.S. stores. “Offering high-quality food in our U.S. stores could drive substantial and sustainable growth,” he said.
If Couche-Tard successfully acquires Seven & I, it would mark the largest foreign takeover of a Japanese company.
In September, Seven & I was deemed “core” to Japan’s national security, although the finance ministry assured it would not impede a takeover.
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