Transcript:
Conway Gittens: The future of 7-11 has now been thrown into doubt. The founding family behind Seven & I, parent company for the global convenience store chain, was unable to come up with financing for a $58 billion buyout.
The abandoned effort now paves the way for Canada’s Alimentation Couche-Tard to go ahead with its $47 billion takeover offer. This massive deal would create a behemoth in the global convenience store world at a time when consumers are watching their weights and watching their pennies. Alimentation Couche-Tard has more than 16,000 Circle K and Couche-Tard locations throughout North America and Europe. Meanwhile, the conglomerate that includes 7-Eleven has 85,000 stores in the United States and Asia. North America is responsible for 75 percent of the company’s roughly $80 billion annual sales.
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Seven & I Holdings said in a statement that it “remains committed to exploring all opportunities to unlock value for shareholders and continues to assess a full range of strategic alternatives, including the proposal from Alimentation Couche-Tard.”
7-11 has risen from one of Japan’s best-known retailers into the world’s biggest and most recognizably known convenience store brand. The business, however, has gotten tough in the U.S. Sales tend to fluctuate with gasoline prices, and demand for cigarettes, once a cash cow, is no longer consistent. Add to that the consumer trend toward healthier food options and all of that is putting pressure on profits.
The Couche-Tard deal, however, isn’t a slam dank. It’s likely to face tough antitrust scrutiny in the U.S. and Japan has already deemed Seven & I a critical business of national security.
That’ll do it for your Daily Briefing. From the New York Stock Exchange, I’m Conway Gittens with TheStreet.
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