Circle K operator Alimentation Couche-Tard’s proposal to acquire Seven & i Holdings Co., the owner of 7-Eleven, is likely to face antitrust scrutiny, especially in the U.S. Bryan Gildenberg, managing director at Retail Cities, expects regulatory concerns and potential divestments, given that Circle K and 7-Eleven are the top two convenience store chains in the U.S. The American Federal Trade Commission is likely to have strong opinions on the merger, while Japanese regulators may also have reservations. Couche-Tard confirmed a preliminary takeover offer for Seven & i Holdings, but did not disclose the offer amount.
If the deal goes through, the combined company would hold 12.3% of the U.S. convenience store market, a significant figure compared to the next largest player, Casey’s, with a 1.7% share. Antitrust risks would be particularly pronounced in states like Florida and Texas, where there is a substantial overlap between the two chains. Despite having far fewer stores globally compared to Seven & i Holdings, Couche-Tard commands a higher valuation of $57 billion, as opposed to the Japanese company’s $38 billion. Following news of the proposed bid, Seven & i shares soared 23% while Couche-Tard’s shares dropped 2%, with Seven & i’s shares falling nearly 11% the next day.
Should the acquisition be successful, it would mark the largest foreign takeover of a Japanese company, potentially paving the way for more acquisitions in the country. Gildenberg highlights the opportunity for international expansion in Japan, which is the third largest market globally and one of the least penetrated by global companies. He notes that Japan’s top retailers are predominantly local brands, making access to the market especially significant. Couche-Tard’s announcement of a separate deal to purchase U.S. company GetGo, which operates 270 convenience retail and fueling locations, indicates its push to enhance food services offerings, an area where both GetGo and 7-Eleven excel.
Overall, Couche-Tard’s aggressive acquisition strategy demonstrates its commitment to expanding its presence in key markets like the U.S. and Japan. While the proposed takeover of Seven & i Holdings faces regulatory hurdles, the potential benefits of the deal in terms of market share and access to Japan’s retail landscape are significant. Gildenberg emphasizes the importance of Japan as a strategic market for global companies, highlighting the country’s large market size and opportunities for growth. Couche-Tard’s interest in strengthening its food services offerings through acquisitions like GetGo and 7-Eleven underscores its focus on diversifying and expanding its business portfolio in the competitive convenience store industry.
