Seven & I fluctuates from stop high to high! An opportunity for stock prices to rise? Even if an acquisition refusal of up to 12 trillion yen is an opportunity to accelerate corporate reforms!

An “innovative company” whose growth is showing signs of decline
Seven & i established a business model called a convenience store, and even after that, 7-Eleven brought numerous innovations to the distribution industry, such as POS systems, joint delivery, and entry into the banking business.
While domestic competitors are unrivaled in the convenience store business, issues have also come to light in recent years. One isDomestic convenience stores are saturatedThat's what it has become. In the financial results for the first quarter (March-May) of the fiscal year ending 2025/2, sales of the domestic convenience store business decreased 1.8% from the same period last year, and operating profit decreased 4.4%. Currently, existing store sales in June and July are continuously negative compared to the same month last year.
Issues more serious than convenience stores include the supermarket business, which can be said to be the ancestral business,Slump in non-convenience store businessesthat's it. There was also a boost from US activists seeking separation of unprofitable businesses from Value Act Capital, and department stores under its umbrella, Sogo Seibu were sold to a US investment fund in 23/9. In April this year it will be centered around Ito-YokadoRegarding the supermarket business, we will begin considering a partial sale of shares and an IPO on the premise that it will be restructured until the fiscal year ending 26/2It was announced.

Who is Kouchthal?
Alimantacion Couchthard, who proposed an acquisition to Seven & i this time, is a convenience store operator headquartered in Canada and is listed on the Toronto Stock Exchange. As of the end of April '24,We have 0.01 million6740 stores under brands such as “Circle K” in 31 countries, mainly in North America, Europe, and Asia. Of these, those with gas stations account for around 0.01 million3000 stores.
In the United States, it operates 7131 stores, second only to US 7-Eleven, and in addition, there are 2142 stores in Canada, 5272 stores in other areas such as Europe, and 2195 license agreement stores.
The company'sThe biggest characteristic is that acquisitions drive growththat's it. According to the company's IR materials,Since 2004, 75 acquisitions have been carried out, and 73% of the store network is due to acquisitionsThey say it's a thing. According to multiple deers, they also embarked on the acquisition of French retail giant Carrefour in '21, but they did not succeed due to political opposition.

According to IR materials, the company said, as an advantage of its M&A strategy, “We have a balance sheet that allows very large deals that only a small number of companies can do.Ability to pay up to 1 billion dollars (approximately 1 trillion470 billion yen) in cash for acquisitions. With our decentralized approach,Projects of any size can be handled quickly” is listed. Regarding this acquisition, the company says it is “focusing on what benefits the customers, employees, franchisees, and shareholders of both companies and can agree with each other.”

Is an acquisition possible in the first place? There are also financial and regulatory bottlenecks
Nonetheless, it seems that there will also be high hurdles for this acquisition. The total market value of Seven & I has risen to around 5 trillion yen,It is the largest acquisition project for a domestic company from overseas, and there is a possibility that it will also be the largest acquisition project for CouchardIt is said that there is.
Bloomberg on the 20th said Bloomberg Intelligence (BI) analyst Diana Roselopena, “Considering that the industry average EBITDA (profit before interest payment/tax/depreciation/amortization deduction) ratio calculated based on market forecasts for the current fiscal year is 11.51 times,The acquisition amount may reach 86 billion dollars (about 12 trillion640 billion yen)It introduces the indication”.
Meanwhile, regarding the merger of the first and second convenience store chains in the US, CNBC on the 20th commented by Mr. Brian Gildenberg, the managing director of the retail consulting company Retail Cities, from the viewpoint of antitrust law (antitrust law)”The US Federal Trade Commission will look very harshly. Regulatory concerns and necessary divestments will be required in order for this deal to succeedThe comment” has been introduced.

How will Seven & I respond?
Seven & I, which received a takeover proposal, was on the 19thForm a special committee composed of independent outside directors to review proposalsIt was also revealed that they were doing it. This measure is the “Action Guidelines for Corporate Acquisitions” formulated by the Ministry of Economy, Trade and Industry in 23/8,”It is basic to “seriously consider” a “sincere acquisition proposal”It's based on what it says”.
According to the action guidelines, at the time of examination, “while obtaining additional information on the acquisition proposal from the acquirer, we focus on the management policy after the acquisition, the appropriateness of transaction conditions such as the acquisition price, etc., the acquirer's financial resources/track records/management ability, and the feasibility of the acquisition, etc.Examine the pros and cons of acquisitions from the viewpoint of whether they contribute to improving corporate valueIt says, “It will be done.”
Form a special committee composed of Seven & iUntil now, independent outside directors have been involved in analyzing and verifying the company's strategy as a “strategy committee,” and have also proposed IPOs for the supermarket businessThere are circumstances.In order for the Special Committee to accept the Kustal side's proposal, it is necessary to acknowledge that it clearly contributes to improving corporate value rather than the strategies they were involved in formulating. The hurdles for the content of the proposal are quite highYou could say that.

Is receiving or rejecting a takeover proposal positive for shareholders
According to the Ministry of Economy, Trade and Industry's action guidelines, with regard to acquisition proposals,”Thoroughly compare and examine the acquisition price and corporate value improvement measures proposed by the acquirer and the corporate value improvement measures in the case of management by the current management team from a quantitative perspectiveThat is desirable.” Furthermore,”Actions should be taken so that accountability can be fulfilled (ex post facto) regarding the response to the acquisition proposal and the rationality of the judgment on whether or not to respond to the acquisition proposalIt says”.
In other words, if the Action Guidelines are followed, Seven & i's Special Committee and Board of DirectorsWhether it is being acquired or rejected, it is necessary to choose a method that further enhances corporate value and explain the reason rationallyIt means. This is what if Seven & IWhen an acquisition proposal is rejected, it is necessary to achieve an increase in corporate value that exceeds the proposalIt also means that.
Also, it is assumed that whether or not to finally accept the acquisition will be left to the shareholder's judgment. Seven & I has not introduced takeover defense measures, and if the Couchthard side aims for an “acquisition without consent” in opposition to the takeover, Seven & I”Confirm the reasonable intentions of shareholders at general shareholders' meetings regarding approval and disapproval of takeover response policies and countermeasuresThat is the basis” (action guidelines). If there are many shareholders who are not satisfied with Seven & I's explanation, there is a possibility that the company's judgment will be overturned.