Withdrawal of Takeover Proposal for Seven & i: How to Increase Corporate Value Remains a Challenge

Editorial

15:35 JST, July 23, 2025

One of the largest-ever takeover bids by a foreign firm for a Japanese company has abruptly come to an end. The yearlong battle may have an important lesson on ways to increase corporate value.

Leading Canadian convenience store operator Alimentation Couche-Tard Inc. has withdrawn its proposal to acquire Seven & i Holdings Co. for about ¥7 trillion. The Canadian company made the proposal in July last year and continued negotiations, but it broke them off, citing a “lack of constructive engagement” as the reason for the withdrawal.

In response, Seven & i countered that the criticism missed the mark.

The public was highly interested in the developments of the takeover bid. Would the meticulous management of the Seven-Eleven convenience store chain, which has become a part of the social infrastructure, be maintained under the umbrella of a foreign company?

However, the reality is likely that the talks between Seven & i, which insisted on pursuing its growth independently, and Couche-Tard ended without deepening substantive discussions on specific measures to improve corporate value. The negative side of the situation was that the two sides were so busy in a tug-of-war with each other that they were unable to sufficiently work out business improvement measures.

Going forward, Seven & i will need to quickly improve its corporate value. This is because the company has been pursuing structural reforms, including the separation of struggling Ito-Yokado Co., but is only halfway through to restoring profitability.

The recent share prices of Seven & i are more than 20% lower than the acquisition prices offered by Couche-Tard. If the growth strategy stalls and the stock prices remain stagnant, Seven & i could become a takeover target again.

The biggest challenge for Seven & i is to rebuild its overseas convenience store business, which accounts for about 70% of its total sales. It has over 10,000 stores in the United States, more than any other convenience store company, but the firm is unable to fully grasp the needs of the local market.

On the other hand, the Seven-Eleven convenience store chain, which ranks top in Japan, has increased sales at relatively high prices with the selling points of its brand power and the quality of its products.

Has the long experience of success caused Seven & i to become complacent? It has been pointed out that, amid prolonged high prices, the company was slow to introduce products with the sense of affordability demanded by consumers. To accelerate growth, it will be necessary to consider measures to form a new partnership, among other steps.

In recent years, mergers and acquisitions of Japanese companies by foreign firms have become prominent, partly due to the trend of the yen’s depreciation. It can be said that the current times are an era in which even well-known companies have become targets of acquisition by foreign companies.

Companies will be required to consider takeover proposals impartially from the standpoint of shareholders. It will also be vital to thoroughly fulfill their accountability and work to implement highly transparent management.

Japanese companies’ internal reserves have grown to about ¥600 trillion, but the money is not allocated to investment in growth. This is also reflected in the form of undervalued stock prices. Companies should develop growth strategies and actively promote investment.

(From The Yomiuri Shimbun, July 23, 2025)