Japanese retail group Seven & i plans to spin off its North American 7-Eleven convenience store business and launch a 2 trillion yen stock buyback program in response to the $47 billion acquisition offer from Canada’s largest convenience store operator Alimentation Couche-Tard (ACT).
The group announced on Thursday in Tokyo that they will appoint a foreign CEO for the first time and agreed to sell non-core assets such as supermarkets, restaurants, and specialty stores for about 814 billion yen ($5.5 billion) to private equity firm Bain Capital while reducing its stake in Seven Bank to below 40%.
With over 80,000 7-Eleven stores worldwide, this restructuring is the most aggressive strategy to date, aimed at proving to shareholders that the company can sustain independent operations.
Seven & i plans to launch the North American business IPO in the second half of 2026, covering 13,145 stores in the US and Canada, with the company retaining majority ownership.
Funds from the IPO and asset sales will be used to buy back up to 2 trillion yen worth of shares by 2030 and implement a “progressive dividend policy” to enhance shareholder returns.
New CEO Stephen Dacus stated in a press conference that Seven & i will accelerate international expansion and prioritize direct investment to ensure control over operations rather than through franchise operations.
“This will ensure that we have better management capabilities and allow shareholders to benefit more from the global growth of the Seven & i brand.”
Dacus will succeed current CEO Ryuichi Isaka on May 27th, pending shareholder approval. Dacus previously served as an independent director at Seven & i and chaired the special committee responsible for evaluating ACT’s acquisition proposal, intending to continue negotiations with ACT to enhance the company’s valuation.
One of the major obstacles to finalizing a deal with ACT is antitrust issues in the US since 7-Eleven and ACT’s Circle K convenience store business hold the top two positions in the US market, potentially facing strict regulatory scrutiny.
“We do not believe that shareholders would want us to spend over two years waiting for a deal only to be rejected by US courts in the end,” Dacus said.
In addition to Circle K, ACT owns brands like Mac’s and Couche-Tard, with over 14,500 stores across North America, Europe, and Asia. ACT aims to boost its North American market share through the $47 billion acquisition of Seven & i and establish a dominant network of convenience stores with 7-Eleven.
However, Seven & i has chosen to counter by increasing its valuation through the spin-off of its North American business and the sale of non-core assets, demonstrating the feasibility of independent development to shareholders.
7-Eleven has transformed into a popular food convenience store in Japan with fresh sandwiches, rice balls, and bento boxes, changing the eating habits of millions. Yet, some investors criticize the company for excessive expansion, particularly the $21 billion acquisition of Speedway gas station business in 2020, resulting in a heavy capital burden.
Outgoing CEO Isaka mentioned on Thursday that while the company had discussions with ACT regarding the possibility of a deal, the lack of substantial progress on US antitrust issues means that “the proposal cannot ensure benefits for shareholders.”
“We will continue to evaluate all strategic options, including the ACT proposal, to maximize shareholder value.”
Following the news of the spin-off plan, Seven & i’s stock price surged by 10% on Thursday.
If ACT successfully acquires Seven & i, it would be the largest foreign acquisition in Japanese corporate history.
Bain Capital plans to push for the listing of York Holdings (formerly Seven & i supermarket business) within the next three years, aiming to expand its scale through mergers and acquisitions to achieve asset appreciation.
(*This article is based on reports from the Financial Times and Reuters)