The Rundown - Deep Dive: Why the $46 Billion Deal for 7-Eleven Really Fell Apart

Episode Date: July 20, 2025

A $47 billion deal to acquire 7-Eleven just collapsed, but this wasn't just another business negotiation. In this episode, we dive into how Japan came to own one of America’s most iconic brands and why they refused to sell it. From convenience store diplomacy to cultural pride, this is the inside story of the 7-Eleven empire. And why, in Japan, some things really are not for sale.This video is for informational purposes only and reflects the views of the host and guest, not Public Holdings or its subsidiaries. Mentions of assets are not recommendations. Investing involves risk, including loss. Past performance does not guarantee future results. For full disclosures, visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Public.com/disclosures⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠.

Welcome back to the rundown for another weekend deep dive. Today, we are talking about 7-Eleven. The iconic convenience store is owned by a Japanese conglomerate and was on the verge of being acquired for $47 billion by a Canadian company, but that deal just fell apart. And the reasons why say a lot about Japanese corporate culture and why foreign investors keep striking out. So that got me asking a lot of questions.

Like, how did 7-Eleven even go from a store? in Dallas to taking over Japan. And what makes 7-Eleven so different in Japan? And why are foreign companies rushing to buy it? We got a great one for you today. Let's dive in. This might come as a surprise to a lot of Americans, but 7-Eleven isn't an American company anymore.

The store started in Dallas, Texas, about 100 years ago, under a different name, primarily selling blocks of ice to people that didn't have refrigeration back then. They eventually expanded to be a full-on condition. convenience store, changing their name to 7-Eleven in the 40s to reflect their hours of operation from 7 a.m. to 11 p.m., which at the time was a pretty big deal. But by the 1980s, the business was struggling. Competition in the U.S. was brutal, debt was piling up, and the company was losing

money. But while the store struggled in the U.S., across the Pacific in Japan, it was a totally different story. A Japanese retail company called Ito Yacado had licensed the 7-Eleven brand in 1974 and opened their first store in Tokyo. And that store crushed it. It was smaller, it was cleaner, it was better stacked with goods. And over time, the store became woven into daily Japanese life in a way that the U.S. version never really achieved. So by 1991, Ito Yikato ended up buying a 70% stake in the parent company of 7-Eleven for $430 million. And they eventually ended up buying 100% stake in the company by 2005. The 7-Eleven business was folded into a new entity called Seven and I Holdings.

And then Seven and I ended up expanding beyond just convenience stores into a sprawling retail empire. They bought department stores, supermarket chains, and even a financial services company. Today, Seven and I Holdings is one of the biggest companies in Japan. But at the heart of the conglomerate is still 7-Eleven, specifically 7-Eleven Japan. Today, there are over 21,711 locations in Japan, more than double that of the U.S., despite Japan. being a much smaller country. And that's why the company has become a takeover target. So that brings us to Cooch Tard. They are a Canadian retail giant that operates Circle K. In fact, they're one of the largest convenience store operators in the world running nearly

17,000 stores across 31 countries. And you know, Cooch Tard has been buying up regional convenience store chains for decades now. They're essentially trying to take over the convenience store industry piece by piece. So when they looked at seven and They couldn't help but make an offer. Last year, Kuchtard made a $47 billion offer to acquire 7 and I. And Koochthard vision for this deal wasn't just about scale, it was also about synergies. Koochthard said they would bring their operational efficiencies to 7-Eleven struggling North American business, and then in return, they'd gain access to Japan's innovations, like

the fresh food and the advanced inventory systems, and incorporate that into Kuchtard's global network of stores. They saw the deal as a win-win for all sides, and it would have created a convenience store empire spanning every major market on the planet. There was just one problem, though, a problem that a lot of foreign companies run into in Japan. So let's talk about it. All right, so now we get to the messy part of the story. Like I mentioned earlier, 7 and I isn't just a convenience store company, because beyond 7-Elevens, they own department stores, supermarket change, food production companies, and even financial services. They're a sprawling conglomerate, and analysts have been asking for a breakup of the company to unlock shareholder value.

In fact, an activist investor tried to do something about that a few years ago. Value Act Capital took a $1.5 billion stake in 7 and I holdings back in 2020 to pressure them to spin off their convenience store business. Value Act argued that a 7-11 spin-off would unlock 80% more shareholder value compared to keeping the current bloated structure. But when the Value Act nominated their directors to the board of the company to influence some changes, they got shut down pretty quickly by Japanese shareholders. In fact, the existing CEO got more than 75% of the shareholder votes. And this result gives a good insight into Japanese corporate culture. So the corporate culture in Japan values stability and legacy over quick returns.

Shareholders tend to back management, even if the numbers say otherwise. So fast forward to today, a similar thing happened to Kuch. Tard when they tried to acquire the company for $47 billion. According to Kuchtard, 7 and I's leadership basically stonewalled them for a year. Kuchtard said that meetings with 7 and I's executives were superficial and that they barely engaged. And Kuchtard tried everything to make the deal work. They offered just to buy the international business. They also offered a termination fee worth over $1.6 billion in case this deal got blocked by antitrust regulators.

And they even proposed just taking a 40% stake in the Japanese business. But Seven and I's board never took those offers seriously. In fact, it seems like they were never going to say yes to any kind of deal. Because the Japanese company was protecting their way of doing business from being influenced by foreign investors. So after a year of trying, Cooch Tard has thrown in the towel and the deal is officially off. The analysts can point to boardroom politics or valuation gaps or Seven and I's complex structure. But at its core, this deal died because it ran into something more powerful than just money. And that is Japanese economic nationalism, the idea that certain assets are just too important

to be handed over to foreign owners. Japan has a longstanding culture of soft protectionism. They don't always block deals with regulation, but they block them with corporate inertia. And this failed 7-Eleven takeover by Kuch Tard is the best example of this. See, 7-Elevens aren't just a convenience store with chips and soda in Japan. They are an essential part of daily life. People go to 7-Elevens to pay utility bills and pick up deliveries and get government forms, and most importantly, these stores turn into emergency supply hubs during national disasters,

like earthquakes or typhoons. The stores are part of a public-private initiative that ensures access to food, water, and basic goods during a disaster. So when a Canadian company comes knocking at the door to take over the company, no matter how big their offer is, there's going to be some friction to sell. And what makes it so interesting is that the current CEO, of Seven and I is an American. His name is Stephen Dawkes, and he has a Japanese mother, an American father. In fact, he grew up in the States working at his dad's 7-Eleven as a teenager.

That's something that me and Stephen have in common. So yeah, I just find it interesting that the guy who helped kill the Kuch-Tard deal literally grew up in both cultures. So if anyone understands what was at stake, it was him. But because Seven and I has backed out of this deal, there's going to be enormous pressures on management to prove they made the right decision. Maybe at some point Japanese shareholders might become frustrated and the company might be targeted again by Koothtard or another foreign company. So while the deal might be off for now, don't be surprised if another company tries to make a move.

So what's the takeaway here? Well, for one, Japanese companies have become a prime target for American activist investors because these companies look undervalued or mismanaged by Western standards. But here's what those investors often fail to understand. Japanese corporate culture is built different. Western investors want faster growth, higher margins, and bigger returns. Japanese companies, on the other hand, prioritize employee stability, customer loyalty, and long-term thinking. And 7-11 might be the perfect example of that tension. Foreign investors saw a cash cow, while Japanese shareholders saw a pillar of society. So they backed their management and rejected a deal, even if the stock could have gotten higher from this acquisition.

So I'm sure next time a foreign investor tries to buy a Japanese company, they're going to keep that in mind. In the meantime, though, it would be great if 7-Eleven could bring over some of that Japanese innovation and bring it over to the U.S. Or I guess I could just take a trip over to Japan and see it for myself and then film a part two for this deep dive. Well, all right, guys, that's it for today's weekend deep dive. If you guys enjoyed today's episode, don't forget to hit us with a five-star rating on Apple, Spotify, or wherever you listen to your podcast. and let us know in the comments on Spotify or YouTube on what you thought about this episode and if you've been to a 7-Eleven in Japan.

Thank you guys so much for spending a part of your weekend with us. Shout out to Mike and Connor for all the work behind the scenes and we'll see you guys back here on Monday. Rosen lasagna, medium power, 15 minutes. Sounds like Ojo time. Let's play. Feel the fun with Play-Ojo. The online casino with all the latest slot and live casino games. What you win is your.

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