Seven & i Holdings, the Japanese operator of 7-Eleven, has appointed its first foreign CEO as it seeks to fend off a $47 billion takeover bid by Alimentation Couche-Tard (ACT) and implement a major restructuring plan.
Leadership Change and Strategic Overhaul
Stephen Dacus, a lead outside director, will replace Ryuichi Isaka as CEO on May 27. Addressing reporters in Japanese and English, Dacus stated that discussions with Couche-Tard would continue, but significant regulatory obstacles could prevent a merger.
“What I do not think our shareholders would want is for us to spend two plus years in limbo just for that to be rejected by the U.S. courts,” Dacus said.
Major Business Restructuring
As part of its restructuring, Seven & i announced the sale of its superstore unit to Bain Capital for 814.7 billion yen ($5.5 billion) and a reduction of its stake in Seven Bank below 40%. The company also plans to buy back about 2 trillion yen worth of shares through 2030 and list its North American convenience store business by 2026.
The move follows long-standing investor criticism over capital allocation and an unsuccessful $58 billion buyout attempt by the Ito family group.
Market Reaction and Analyst Perspectives
Seven & i shares surged 6.1% following reports of the share buyback plan. Analysts view the move as a defensive strategy against Couche-Tard.
“The buyback looks like an attempt to lift market value and fend off Couche-Tard,” said Lorraine Tan, regional director at Morningstar.
However, some analysts believe the restructuring may not derail ACT’s takeover ambitions. “Because the IPO is not for a while, there is still time for ACT to make a deal for the whole shebang,” said Travis Lundy, an analyst at Smartkarma.
Criticism of Isaka’s Tenure
Isaka, who has been with the company since 1980 and served as CEO since 2016, faced criticism from investors such as ValueAct Capital for his strategic decisions. His leadership saw Seven & i acquire Speedway gas stations for $21 billion in 2020, significantly expanding its North American footprint but at a price some believe was excessive.
Independent retail analyst Akihito Nakai commented, “They jumped into the global market before they had a solid foundation in place. In hindsight, they got the order wrong.”
Future Strategy Focused on Fresh Food
Dacus signaled that the company will continue its fresh-food expansion strategy, which has been central to 7-Eleven’s success in Japan. He noted plans to bring high-quality Japanese food products to U.S. stores.
“If we can bring that same quality of food to our stores in the U.S., that would be a huge and sustainable source of growth,” he said.
Regulatory and National Security Considerations
If ACT succeeds, it would be the largest foreign takeover of a Japanese company. Seven & i was classified as “core” to Japan’s national security in September, but the finance ministry has indicated this would not create regulatory barriers for a potential deal.