A CRUCIAL LIFELINE
Nonetheless, accepting a takeover of Seven & i, a deal which would dwarf past foreign takeovers of Japanese firms, feels like a stretch. This is no anonymous maker of parts, but a very close-to-hand and beloved brand that exists in every prefecture in the country and is frequented daily by some 20 million people, or a sixth of the population.
7-Eleven has also been the ultimate pioneer in the convenience store space: It pioneered the sale of onigiri rice balls in the 1970s and built out a vast range of cheap, fresh and surprisingly nourishing food with its just-in-time inventory management. Enabling customers to pay bills or withdraw cash at any time broke the monopoly of banks that closed at 3pm and on weekends.
From the introduction of affordable, fresh coffee to its recent plans to compete with Domino’s Pizza in meal delivery, Seven continues to make its stores more essential. In times of disaster, the conbini is now seen by locals and authorities alike as a crucial lifeline.
But none of this impresses investors. The company has made a raft of changes since its first tussle with activist shareholders when Third Point founder Dan Loeb took a stake in 2015. It has appointed current chief executive officer and Loeb favorite Ryuichi Isaka, scaled back its supermarket presence, sold the Sogo-Seibu department store chain and launched share buybacks.
But even so, the stock still trades around the same level as before Loeb announced his stake. Dissatisfaction with the recent market performance led to ValueAct Capital Management’s attempting to oust Isaka.
Management’s most recent step has been an aggressive expansion of its convenience store business in the US, where it believes it can capitalise with a roll-out of Japanese-style food options. With the takeover bid, the concern will be the opposite in its home country – whose conbini still make up more than 40 per cent of Seven & i’s operating profit – that a Couche-Tard purchase will instead bring a subpar experience.
