7-Eleven's Big Shake-Up: New CEO, Big Plans

Seven & I Holdings, the company behind the 7-Eleven convenience stores, is making big moves. The Japanese company has just appointed its first foreign CEO, Stephen Dacus. This move comes after a tough six months. During this time, the company faced a massive $47 billion takeover bid from Canadian company Alimentation Couche-Tard (ACT). Dacus, who will take over on May 27, has a clear task: overhaul the business and fend off the takeover bid. He knows it won't be easy. Dacus said that there are significant regulatory hurdles that could block a merger. He also mentioned that shareholders wouldn't want to spend years in limbo just for a deal to be rejected by courts. Seven & I Holdings has over 80, 000 stores in 20 countries. To strengthen its position, the company has agreed to sell its superstore unit to Bain Capital for about $5. 5 billion. It also plans to reduce its ownership of Seven Bank to below 40%. Additionally, the company will buy back about $13. 5 billion worth of shares by 2030. It also aims to list its North American convenience store subsidiary by the second half of 2026. The company has faced criticism for its capital allocation for years. The takeover bid from ACT was first made in August and later raised to $47 billion. In response, a group led by the Ito family, who founded Seven & I, made its own buyout offer. However, this offer failed to secure the necessary funding and was scrapped late last month. Dacus has a personal connection to 7-Eleven. His father was a franchisee, and he worked the midnight shift in a store as a teenager. Dacus previously held executive roles with Walmart and Fast Retailing. He also led a special committee vetting the takeover bids. Paul Yonamine, another outside director, has replaced Dacus as head of the special committee. Seven & I shares surged 6. 1% after Bloomberg News first reported the share buyback plan. Lorraine Tan, a regional director at Morningstar, said the buyback looked like an attempt to lift market value and fend off Couche-Tard. She also expressed concern about how the company will fund the dividends and buyback. Some analysts believe that Seven & I’s restructuring plan may not derail ACT’s bid for the company. Travis Lundy, a special situations analyst, said the announced divestitures leave Seven & I mainly with its convenience store businesses, which is what ACT really wants. Bain Capital plans to list the superstore unit, known as York Holdings, in about three years after scaling it up through acquisitions. Seven & I turned the humble 7-Eleven store into a popular food destination in Japan by serving up fresh sandwiches, rice balls, and rows of boxed lunches. This changed how millions of people eat. The company has been criticized by foreign investors for pursuing what they said was a flawed strategy. Isaka led Seven & I’s $21 billion acquisition of Marathon Petroleum’s Speedway gas stations in 2020, outbidding ACT and greatly expanding the company’s footprint in the North American market. However, some analysts and investors said the company overpaid for the US assets while remaining saddled with low-margin subsidiaries in Japan. Dacus indicated he would stick to the food-centered strategy, saying Seven & I was working with vendors to bring the products found in Japan to store shelves in the US. He believes this could be a huge and sustainable source of growth. If ACT succeeds in winning control of Seven & I, it would be the biggest foreign takeover of a Japanese company. Seven & I was classified as “core” to Japan’s national security in September, although the finance ministry said at the time it would not create hurdles for a takeover.