Seven & i quarterly profit tumbles as it seeks to fend off Couche-Tard bid

TOKYO: Japan’s Seven & i Holdings said on Wednesday (Apr 9) that fourth-quarter profit fell 15 per cent, a result that is likely to hamper its ability to fend off a takeover attempt by Canada’s Alimentation Couche-Tard.

The operator of 7-Eleven convenience stores booked operating profit of 105.6 billion yen (US$726.4 million) for the December-February period, somewhat ahead of the 94.5 billion yen average of eight analyst estimates compiled by LSEG.

The result was its fourth consecutive quarter of profit decline, as high levels of inflation hurt consumer spending both in Japan and in North America. It has suffered in its home market in particular as price-conscious customers shift to cheaper rivals.

Seeking to bat away Couche-Tard’s US$47 billion bid, Seven has argued that antitrust barriers in the US may nix any deal and its own initiatives to overhaul its business are sufficient to increase corporate value.

After a management buyout led by Seven & i’s founding family collapsed in February due to lack of funding, it has begun selling off non-core businesses and has appointed a new CEO.

It has also announced a US$2 billion share buyback and proposed listing its North American convenience store subsidiary by the second half of 2026.

In their most concrete sign of engagement yet, Seven & i and the operator of Circle-K stores said they were working together to find buyers for around 2,000 of their convenience stores in the US – a step seen as necessary for their potential merger to pass a US Federal Trade Commission review.

Sources have told Reuters that interested buyers are primarily private equity firms.

Shares in Seven & i closed at 1,848.5 yen on Wednesday before the results. That remains far below Couche-Tard’s offer of around 2,700 yen, indicating that investors are sceptical the bid will succeed.