Seven & i at the Center of M&A Frenzy with Couche-Tard's $47 Billion Offer

The ongoing takeover battle for Seven & i, the Japanese owner of the 7-Eleven convenience store chain, has brought a spotlight on the increasing interest of foreign bidders in the Japanese M&A market. Canada's Alimentation Couche-Tard has tabled a substantial $47 billion offer for Seven & i, which has resulted in the company's management reevaluating their profitability strategies. Alongside this, a member of the company's founding family is considering a leveraged buyout, though details remain undisclosed. This activity is set against a backdrop of a 19.1% increase in foreign acquisitions of Japanese firms year-on-year up to November, driven by factors such as a weak yen, asset undervaluation, and a significant disparity in profitability between Japanese companies and their global counterparts. The weak yen, depreciating by approximately 30% against the dollar since 2022, has made Japanese firms more appealing acquisition targets. Experts like Hidenori Yoshikawa from Daiwa Institute of Research suggest that this trend is an opportunity for acquiring Japanese technology and services at reduced costs, whilst dealing with the profitability gap present at large firms such as Seven & i. Japan's unique corporate culture and lifetime employment system, which often prioritizes community over shareholder profit, poses challenges for foreign acquisitions. Despite efforts by successive Japanese governments and the Tokyo Stock Exchange to encourage corporate governance reforms, traditionalist views remain prevalent. Prominent analysts believe this deal marks a turning point in Japan's M&A cycle, potentially reshaping it into a highly attractive global market for mergers and acquisitions.