Seven & i Holdings Co. is seeking deals in Europe to bolster growth abroad as the retailer faces increased pressure to consider a proposed takeover by Canada’s Alimentation Couche-Tard Inc.
The Tokyo-based operator of convenience stores and supermarkets currently does business in 20 countries and regions, and aims to add 10 more nations by fiscal 2030, while tripling sales to ¥30 trillion (US$200 billion).
Seven & i already has stores in Scandinavia and plans to expand into the rest of Europe by investing in local companies, said Ken Wakabayashi, chief executive officer of 7-Eleven International LLC, the division responsible for global markets outside North America and Japan.
“There are quite a few places that sell ready-to-eat food, but there aren’t that many full-package convenience stores in Europe,” Wakabayashi said in an interview Thursday. “It’s best to partner with convenience stores, but we are also considering partnering with other businesses. Coffee shops and bakery chains are also on our list.”
Outlets in good locations and a strong supply chain network are a “must have” for selecting partners, he added. While he declined to discuss details of any negotiations or the scale of any investments, he said joint venture will be the more common form.
A successful expansion in Europe and entry into new markets is crucial for Seven & i at a time when the Japanese retailer is facing an uphill battle to fend off Circle-K owner Couche-Tard, which has proposed to buy the company at a valuation of about $47 billion.
Pressure is rising after a counter-proposal by Seven & i’s founding Ito family and Itochu Corp. for a ¥9 trillion management buyout collapsed this week, sending the shares tumbling and leaving the company to carefully consider all strategic options — including the proposal from Couche-Tard.
Seven & i “remains committed to exploring all opportunities to unlock value for shareholders,” and continues to assess Couche-Tard’s proposal, it said Thursday. It’s engaging constructively with the Canadian company to see if a viable solution can be found to address the antitrust challenges that would likely arise in the US, the retailer said.
Couche-Tard has yet to gain access to the Japanese company’s finances, months after proposing a takeover, Bloomberg News reported Thursday, citing people with knowledge of the matter.
7-Eleven International generated about 3% of Seven & i’s ¥128.4 billion of operating profit in the third quarter, which ended in November. It lists 17 countries as potential areas for expansion, primarily in Europe.
Seven & i previously relied on licensing agreements for expansion outside of North America and Japan, but has recently switched to investing in companies with supply chains. Last year, the firm bought its licensee in Australia for about A$1.71 billion ($1.1 billion).
“We have been in the licensing business for a long time — that’s a low-risk, low-return business,” said Wakabayashi. “Instead, we will examine risks carefully and go after taking returns.”
As well as expanding in Europe, Seven & i aims to re-enter Indonesia “at all costs” after it withdrew in 2017, he added.
Kanoko Matsuyama and Koh Yoshida, Bloomberg News
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