7-Eleven Still in Play – Western Grocer

Just a short two months ago, Couche-Tarde attempted to acquire 7-Eleven, the largest convenience store operator in the world with more stores than any other retailer– more than 84,000 across 19 countries. Couche-Tard operates across 31 countries, with more than 16,800 stores.
This offer was rebuffed because it was too low and did not fully address U.S. regulatory concerns. To what came to many as a big surprise, 7-Eleven then announced it will close 444 stores across the U.S. and Canada, citing rising costs and shifts in consumer habits.
The retailer cited a very challenging first half of 2024, noting the significant drop in cigarette sales, which have plummeted by 26% since 2019 as smokers either quit or changed to other nicotine products. There were improvements in other product categories but not enough to offset this decline.
By closing stores, the company plans to” optimize a number of non-core assets that do not fit into our growth strategy. At the same time, we continue to open stores in areas where customers are looking for more convenience.”
Couche-Tard has made a revised offer, but 7-Eleven is still examining it.
Now, 7-Eleven says it has received a new management buyout proposal from a member of the family that helped found the company, offering an alternative to the takeover bid from Couche-Tard.
The proposal is being made by Junro Ito, who is a vice-president and director of the company, and Ito-Kogyo Co. Ltd., a private company affiliated with him.
Stephen Hayes Dacus, chair of the special committee and board of directors of the company, said the company is committed to an objective review of all alternatives as it considers the proposals from Ito and Couche-Tard as well as the company’s stand-alone opportunities.
Many in the financial industry believe the likelihood of a successful offer by Couch Tard is low. A take over by a Japanese group would provide investors with acceptable value creation and skirt potential competition issues in the U.S. and concerns around the foreign takeover of a core local entity for Japanese regulators.
Couche-Tard has argued its proposal offers clear strategic and financial benefits and has said it believes the two companies can reach a mutually agreeable transaction.
In the meantime, 7-Eleven is busily addressing a changing business. With consumers seeking fresh, higher-quality foods and beverages, the company aims to pivot its approach to what it provides on its shelves and self-service areas. Food has recently overtaken cigarettes as the largest category at the company and it has been investing heavily in its food and beverage modernization program to capitalize on this shift. Food and beverage updates will include bake-in-store items, self-serve stations, roller grills, grab-and-go options, and drinks like espresso, cappuccino, iced coffee, and lattes.