Participants taste rice balls at the 7-Eleven Japan Product Conference in Tokyo on January 23, 2024. Employees and suppliers gathered to discuss the taste, texture and fillings of Japanese rice balls, one of 7-Eleven’s most important products. One, there are over 2 billion sold annually.
Noriko Hayashi | Bloomberg | Getty Images
Alimentation Couche-Tard’s proposal to acquire the owner of 7-Eleven is likely due to the affordability of its shares (compared to global peers), as Seven & i Holdings Ltd.’s core business doesn’t leave much to be desired, says Richard Richard Kaye, portfolio manager at independent asset management group Comgest, said on Monday.
Circle K operator Offer to acquire its Japanese rival last month. The amount has not been disclosed, but if the deal goes through, it could be the largest-ever foreign takeover of a Japanese company.
On Friday, the U.S. discovered Urging Artisan Partners Asset Management Qiyi Holdings It will “seriously consider” the takeover offer and seek bids for the company’s Japanese unit “as soon as possible”.
The takeover bid comes amid a company-wide restructuring aimed at expanding 7-Eleven’s global operations and divesting its underperforming supermarket business.
“ACT is uniquely positioned to enhance (Seven & i’s) corporate value,” Artisan portfolio managers N. David Samra and Benjamin L. Herrick wrote in a letter, according to Reuters. “The negotiations with ACT are ongoing. Japan’s best strategies for maintaining positive stakeholder outcomes.”
Kaye disagreed in an interview with CNBC “Squawk Box Asia“I don’t think it’s necessary for foreign acquirers to make radical changes,” he said.
The company has done an “excellent job” with logistics and product innovation, “and I think it’s hard to imagine it could be done better,” he added.
Kay acknowledged, however, that the company could revamp other divisions, such as department stores, more quickly.
But he added that these operations do not impact Sevenhei’s profit margins or capital returns. “Frankly, (ACT) is probably looking at cheap stocks.”
Seven & i currently has a price-to-earnings ratio of 27.96 and a price-to-book ratio of 1.47, according to LSEG.
ACT Yes Approximately 16,700 The number of stores worldwide is far less than the approximately seven holding companies. 85,800 stores, but this Canadian company is asking for more As of Monday’s close, the company was valued at $54 billion, while the Tokyo-listed company was valued at 5.26 trillion yen, or $38.3 billion.
regulatory hurdles
The proposed deal is expected to draw antitrust scrutiny in both countries, particularly in the United States, a retail analyst recently told CNBC.
“I think there are going to be some regulatory issues and some divestments that need to happen in order for this (deal) to go through,” Retail Cities managing director Bryan Gildenberg told CNBC’s “Street Signs Asia” last month.
Bloomberg reported that Seven & i is seeking designation as a “core” company under the country’s Foreign Exchange and Foreign Trade Act, which would require Japan’s Finance Ministry to review entities seeking to acquire more than 10 businesses, people familiar with the matter were quoted as saying on August 27. .
These companies include those in the aerospace, nuclear energy and rare earth industries, the report added.
The move shows that 7-Eleven is concerned that the ACT acquisition could damage its “carefully crafted, decades-honed, and very unique convenience business model that 7-Eleven developed in Japan and is now re-exporting to the United States.” Kaye said.
Konbini is a Japanese term used to describe the ubiquitous convenience stores in Japan.
Still, Kaye called the stock a “buying opportunity” among a pool of Japanese-listed stocks that includes multinationals such as Fast Retailing and Pan Pacific International Holdingsoperates the Don Quijote chain.
He noted that these companies “do great business even on a global scale, but their costs are cheaper than their global peers.”
