7-Eleven: Japan convenience store giant targeted by rival chain

When the proprietor of 7-Eleven introduced this week that it had received a buyout offer from a Canadian rival it triggered shockwaves in Japan.

A Japanese firm of this measurement has by no means been purchased by a international agency.

Traditionally, corporations from Japan have been extra seemingly to purchase abroad companies.

7-Eleven is the world’s greatest comfort retailer chain, with 85,000 retailers throughout 20 nations and territories.

And it has been particularly profitable at promoting itself as an possibility for a fast and low-cost but tasty meal, and in locations the place there’s already an abundance of that, comparable to Japan and Thailand.

“We’ve extra shops than McDonald’s or Starbucks,” the chief government of Seven & i Holdings, Ryuichi Isaka, informed BBC Information earlier than the agency acquired the buyout provide.

Round 1 / 4 of these 85,000 retailers are in Japan, whereas there are roughly 10,000 within the US.

Compared, Quebec-based Alimentation Couche-Tard, which operates the Circle Okay chain, has virtually 17,000 shops in 31 nations and territories. Greater than half of its retailers are in North America.

The method valued Seven & i at greater than $30bn (£23bn) earlier than information of the preliminary provide emerged.

7-Eleven’s shares jumped by over 20% on Monday, earlier than giving up a few of these positive factors the next day.

Analysts level to the Japanese yen’s weak spot towards the US greenback and different main currencies for serving to to make Seven & i reasonably priced.

Together with the weak spot of the yen, efforts by the Japanese authorities to advertise mergers and acquisitions look like working, mentioned Manoj Jain from Hong Kong-based hedge fund Maso Capital.

7-Eleven has been eager to capitalise on the recognition of the meals it sells – a wide selection, together with rice balls, sandwiches, cooked pasta, fried hen and dumplings.

Whereas in a lot of the world comfort shops are the place folks seize a bar of chocolate or a bag of crisps in an emergency, in Japan, retailers like 7-Eleven are fashionable with guests trying to find culinary delights.

These 7-Eleven dishes have turned the chain right into a social media sensation in Asia.

Dropping right into a 7-Eleven retailer has even been touted as one of many high issues to do in Thailand, the place its ham and cheese toastie has develop into a TikTok hit.

British singer Ed Sheeran is among the many celebrities who’ve helped increase 7-Eleven’s profile – a video of him making an attempt snacks from a retailer in Thailand went viral.

Mr Isaka has been aiming to repeat that success within the US and European markets as the corporate got here underneath stress from traders to promote a few of its companies and concentrate on the 7-Eleven model.

The agency has been updating its technique so extra shops might comply with the method of its Japanese retailers.

“What we discovered is that shops which promote recent meals are attracting many extra buyers,” Mr Isaka mentioned.

“We wish to develop with prime quality – not simply enhance the amount. We wish to make sure that clients are joyful, and enhance gross sales of every retailer while growing the variety of shops,” he added.

Seven & i has additionally been on a purchasing spree. In January, it purchased greater than 200 shops within the US from petrol station chain Sunoco for round $1bn (£770m).

In April, it purchased again greater than 750 shops from a franchisee in Australia.

For many of its virtually century-long historical past 7-Eleven was an American model.

Beginning out in 1927 promoting blocks of ice that have been used to maintain fridges cool, it later stocked important objects like eggs, milk and bread.

On the time, the shops have been open between 07:00 and 23:00 – therefore the title.

Because the enterprise grew, 7-Eleven started providing franchises outdoors the US.

In 1974, Japanese retail agency Ito-Yokado struck a deal to open the nation’s first 7-Eleven. In 1991, it purchased a 70% stake within the chain’s US dad or mum firm.

The founding father of Ito-Yokado, Masatoshi Ito, who died in 2023 on the age of 98, is usually credited with transforming 7-Eleven into a global empire.

Ito-Yokado was renamed Seven & i Holdings in 2005 with the “i” in its title being a nod to Ito-Yokado and Mr Ito, who was by then the corporate’s honorary chairman.

Now, because the the corporate decides whether or not it will stay underneath Japanese possession or return to its North American roots, specialists are questioning whether or not extra of Japan’s large corporations might develop into takeover targets.

There may be now a “larger willingness of Japanese boards and administration groups to just accept offshore capital and be receptive to international approaches,” Mr Jain mentioned.

Extra international traders could now be inspired to pursue their curiosity in Japanese corporations, he added.