Battle for 7-Eleven could be tipping point for Japanese M&A

The multibillion takeover battle for the Japanese owner of 7-Eleven is unfolding against a backdrop of heightened deal activity involving foreign bidders, fanned by a weak yen, undervaluation, and a profitability gap at many big Japanese firms compared with their international peers.

- Megumi Fujikawa

Canada's Alimentation Couche-Tard has made a $47 billion offer for Seven & i, triggering a promised refocus on profitability by Seven & i management. A scion of the founding family has also proposed taking the company private in a leveraged buyout, though details have not been made public. Seven & i said it is considering all options on the table, but hasn't provided a timeline for a decision.

The moves come amid a flurry of foreign-driven mergers-and-acquisition activity in Japan. The number of foreign acquisitions of Japanese companies increased by 19.1% between January and November compared with the same period a year earlier, according to Recofdata, an M&A database provider. Statistics compiled by the firm for the past decade show a broad uptrend in dealmaking—including a bump during the pandemic years. The number of M&A deals rose 66.5% in 2023 compared with 2014.

A big part of that has been driven by Japanese companies selling off more noncore assets as they look to become more lean and efficient. A weaker yen offers another catalyst for dealmaking. The currency has fallen some 30% versus the U.S. dollar since the beginning of 2022, making Japanese acquisition targets more attractive.

"It will be a great opportunity to acquire Japanese technology and services at a discount," said Hidenori Yoshikawa, a consultant at the Daiwa Institute of Research think tank. He sees scope for more investment banks to approach overseas companies with M&A ideas.