7-Eleven Falls to Rival After Poor $58 Billion Acquisition Decision
After seeing off a bid from Circle K, 7-Eleven is losing ground to Aeon and the stock standing will follow.
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I wrote last month about how the parent company of the 7-Eleven chain, Seven & i Holdings SVNDY (T:3382), had fended off a year-long effort from the parent of Circle K to buy out the convenience store empire.
The Canadian company Alimentation Couche-Tard ANCTF failed in its $58 billion bid for Seven & i, overtures it first announced in July 2024. But the Canadian company alleged, in walking away, that the 7-Eleven parent had never taken the merger talks seriously, instead stringing along the bidder by holding formulaic meetings and blocking due diligence.
It seems that Seven & i is “celebrating” that success in a way that follows a familiar pattern for a certain kind of company. Whether the company is coming under fire from minority shareholders to improve governance, or is facing a hostile bid, the pattern is all too familiar: string along the other party by asking for more information; do whatever you can behind the scenes to block the shareholder activity; drag the process out; seek support from management-friendly shareholders; see the process out.
It's missing a beat at a bad time. Domestic plays such as retailers have been driving the Tokyo market this year, as I noted in a recent column, a reversal of the normal pattern that sees exporters dominating gains.
Bad Policy, Stock Decline
It’s bad corporate policy, designed to ensure that existing top management can continue to run the company however it likes. And it often runs it badly, or at least without the interests of shareholders in mind.
We see the results on the Tokyo exchange, with Seven & i sinking to an 18.6% year-to-date loss. The shares plunged 13.6% when Circle K walked away, and continue to drift lower. They are massively underperforming the broader Tokyo market, with the Topix up 11.9% so far this year.
At the same time that Seven & i has been losing its way, the grocery-store chain Aeon AONNY (T:8267) has been gaining ground. Shares in the grocery operator are up 54.8% so far in 2025, a very strong showing indeed for a retailer.
The compound effect of the movement of the two companies is that Aeon, at a ¥5.19 trillion ($35.1 billion) market capitalization, has just pushed past Seven & i, at ¥5.18 trillion.
Simplifying Structures
Aeon operates stores under its own Aeon brand as well as MaxValu, Maretsu and Daiei. It also operates the Ministop convenience stores that go right up against 7-Eleven.
Seven & I has a dwindling supermarket presence under the brand Ito-Yokado. But it has been closing stores rather than in expansion mode. The company decided to focus on its convenience-store operations while under attack from Circle K.
Pan Pacific International Holdings DQJCY (T:7532) runs the popular Don Quijote discount stores that compete well with Aeon and MaxValu, at a lower price point. It is a degree smaller at a market cap of ¥3.5 trillion ($23.6 billion). But it is also reporting improving sales and profits, with the latter up 6.6% in this week's figures for its last fiscal year.
Pan Pacific shares are rising higher, too, up 28.6% in 2025. Those are not quite the heights that Aeon has scaled to but still far better than the Tokyo general market.
Sales Totals Near Parity
The share valuations are powered by sales and sales prospects, with Aeon, with revenue of ¥10.1 trillion in its last fiscal year, now coming close to eclipsing Seven & I’s total revenue of ¥12.0 trillion.
Aeon, formerly known as Jusco, is simplifying its holding and brand structure, which remains unwieldy. It is converting stores under the Aeon brand and merging subsidiary companies into the parent.
That all bodes well for a commitment to improving management style, operations and shareholder returns, even if it does still have a roster of 13 corporate subsidiaries.
The 7-Eleven parent did offload its Sogo and Seibu department-store chains to Fortress Investment Group in 2022. The company more recently changed CEOs, in May bringing in its first non-Japanese leader in the form of Stephen Dacus (an American with one Japanese parent). But its efforts at reform are so far window dressing rather than real efforts to improve governance.
For now, 7-Eleven continues to flounder, while Aeon powers from strength to strength. Expect the stock performance to follow.
At the time of publication, McMillan had no positions in any securities mentioned.
