7-Eleven heirs get $1.3 billion windfall after shock offer

The billionaire family behind Seven & i Holdings Co., owner of 7-Eleven convenience stores, is poised for a massive payday if they support what would be the biggest foreign takeover of a Japanese company.

The descendants of Masatoshi Ito are the second-largest shareholders of Seven & i, with an 8.1 per cent stake worth $US3.1 billion ($4.6 billion) through their family vehicle, according to the company’s annual report. The firm said in a statement that it has received a non-binding buyout proposal from Alimentation Couche-Tard of Canada. Couche-Tard confirmed it made a “friendly” offer.

Masatoshi Ito, the Japanese group’s founder, died last year at the age of 98 with a net worth of $US5 billion.Credit: Bloomberg

If the deal goes ahead, it would be a remarkable turn of events for both companies. Couche-Tard’s billionaire co-founder Alain Bouchard first approached Ito about an acquisition in 2005, according to a 2016 interview with Canada’s Globe and Mail newspaper. Ito rejected the idea, saying both companies needed to improve their standing in the US market before contemplating a merger.

It’s not clear if the Ito clan supports the deal, and they may be unwilling to part with their family legacy, said Michael Causton, co-founder of Tokyo-based JapanConsuming, a research firm focused on the Japanese retail and consumer sector.

“Seven & i is a Japanese institution and a part of Japan’s corporate establishment,” he said. “Selling to a foreign company, and one that is a competitor in North America, is extremely unlikely.”

An external representative for Seven & i said the company wouldn’t comment beyond the statement. Couche-Tard didn’t immediately respond to a request for comment.

A successful deal would also mark a rare exit by a billionaire family in Japan, where in many sectors founders stepped back from day-to-day management of their publicly listed enterprises decades ago but still hold onto their shares.

The Ito clan’s stake is already worth $US866 million ($1.3 billion) more on paper after Seven & i shares jumped a record 23 per cent in Tokyo. That gives the company a market value of 5.63 trillion yen ($US57 billion). Couche-Tard shares slipped.

The Japanese group’s founder died last year at the age of 98 with a net worth of $US5 billion, according to the Bloomberg Billionaires Index. His son Junro Ito is an executive vice president and sits on the board.

Bouchard and Couche-Tard co-founder Jacques D’Amours also built 10-figure fortunes from the convenience store business, with net worths of $US7.9 billion and $US3.9 billion respectively, according to Bloomberg’s wealth index. The company has grown from a single suburban Montreal location opened by Bouchard in 1980 to more than 16,700 stores globally via a deal spree that’s seen it snap up rivals including US chain Circle K.

The 7-Eleven empire now spans 85,000 convenience stores, petrol stations and retail outlets worldwide.Credit: AP

Activist pressure

The late Ito, who was born in 1924, expanded his small family-owned shop into one of Japan’s largest retailers and took 7-Eleven convenience stores global.

Sometimes called the Sam Walton of Japan, Ito was known for a decentralised business style that was influenced by his long friendship with famed management consultant Peter Drucker, who once described Ito as “one of the world’s outstanding entrepreneurs and business builders.”

The company’s empire now spans 85,000 convenience stores, petrol stations and retail outlets worldwide.

It also plays an outsized role in Japan, offering essential services including food and water delivery in times of calamities such as earthquakes, Causton said.

Alimentation Couche-Tard’s president and chief executive Alain Bouchard first approached 7-Eleven about a takeover in 2005. Credit: Reuters

“Seven & i is more than just a retailer; it is part of the backbone of Japanese emergency response services,” he said. “So I don’t see government being supportive of a foreign takeover in this case.”

Until recently, the firm was forging takeovers of its own. In 2020, Seven & i agreed to buy about 3900 Speedway petrol stations and stores from US-based Marathon Petroleum Corp. for $US21 billion, at the time its biggest-ever deal.

Seven & i has come under pressure from activist fund ValueAct Capital Management LP over perceptions that its assets could be worth more and to narrow its focus to 7-Eleven stores.

“The company might work even harder to improve the businesses to prove that it is the best owner,” following soft sales lately, Macquarie analysts Natsuko Douglas and Linda Huang wrote in a note. “Management appears to be making efforts to improve these numbers.”

Foreign takeovers of Japanese companies are extremely rare, but recent changes in guidelines for mergers, as well as activist investors pushing companies to boost value, could open the door to a deal that would create a global convenience-store behemoth.

Heirs of Masatoshi Ito own the majority of their Seven & i shares through an investment vehicle that doesn’t disclose individual ownership. Ito and his wife, Nobuko, had three children — Yasuhisa, Hisako and Junro.

Bloomberg

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