Couche-Tard eyes 7-Eleven acquisition for its cheap stock value

Alimentation Couche-Tard has proposed an acquisition of Seven & i Holdings, the owner of 7-Eleven, driven by the perceived low stock value of the Japanese company compared to its global counterparts. This proposal, made last month, could potentially lead to the largest foreign takeover of a Japanese firm if successful. Portfolio manager Richard Kaye noted that Seven & i's core business has little room for improvement, making it an attractive target for Couche-Tard. Artisan Partners Asset Management has encouraged Seven & i to consider the buyout offer seriously and to explore offers for its Japanese subsidiaries. They believe that Couche-Tard is well-positioned to enhance the corporate value of Seven & i, which has a significant number of stores but is currently trading at a lower valuation than Couche-Tard. The Canadian firm operates around 16,700 stores globally, while Seven & i boasts approximately 85,800. Concerns have been raised regarding potential regulatory issues and the need for divestments to facilitate the acquisition. Experts suggest that Seven & i is apprehensive about how a buyout could impact its unique konbini business model, which has been finely tuned over decades in Japan. This model is now being adapted for the U.S. market, indicating the importance of maintaining its operational integrity. Despite these challenges, Kaye views Seven & i's stock as a buying opportunity within the broader Japanese market, which includes other global companies that are trading at lower valuations. The situation highlights the competitive landscape of convenience store operations and the strategic moves being made by major players in the industry.