Ambitious Canadian try to buy Japanese Seven-Eleven
The founder of Couche-Tard, Alain Bouchard, has done what really should not be possible. From a single gas station in 1980 in Quebec Canada, he has built an international giant with more than 16,000 outlets in Canada, USA, and Europe. Now he hits at Japan.
In Norway and internationally Couche-Tard owns Circle K[1], but that is not enough for Alain Bouchard. He is hungry for more and has recently submitted a bid for Japanese Eleven & i Holdings, the mother company of Seven-Eleven.
This potential deal, if successful, would be one of the largest foreign takeovers of a Japanese company ever. But there is a long way to go. Japan is not known for appreciating foreign control and many in Japan have expressed that a Canadian takeover of the company will affect customers in Japan negatively.
Or as someone puts it: Couche-Tard is extremely concerned with costs and shareholder value, Seven-Eleven is extremely concerned with customer satisfaction.
So far, Seven & i Holdings, has rejected a takeover approach from Alimentation Couche-Tard, but kept the door open for them to consider new bids.
Although the Japanese management believes that the bid of 40 billion US dollars is too low, the deal would have been the largest-ever foreign acquisition of a Japanese company, ever according to The Economist.
World class
The conglomerate runs restaurants, Ito-Yokado superstores, a listed financial services firm, a Shiitake mushroom producer and more. However, it is best known for its 7-Eleven convenience stores.
The company’s Japanese outlets are world-class and highly profitable, but the big opportunity is improving its stores overseas which bring in three quarters of the company's revenue, according to Reuters.
However, the holding company attempts at replicating 7-Eleven's model outside Japan have so far been disappointing. The company's overseas convenience stores generated a 4% EBITDA margin in the three months ended May 2024, compared to 8% in Japan! Couche-Tard’s overall business has margins of about 8%.
We think there is reason to believe that Alain Bouchard (75), will soon place a higher bid for Eleven & i Holdings
Sources: Economist, Reuters, FT, Eleven & i Holdings, Couche-Tard, NHH
[1] And much more that is not on the agenda today