“If, at first, you don’t succeed… try, try again…”
It’s an old motto of determination and persistence. And one that Canadian company Alimentation Couche-Tard has clearly taken to heart.
In August, Asian media outlets reported that the Canadian convenience store giant submitted a friendly offer to buy Seven & I Holdings Inc. (OTC: SNVDY) of Japan for $38.5 billion.
Seven & I Holdings is the primary owner of 7-Eleven convenience stores in both the U.S. and Japan.
After its initial offer was rebuffed, Couche-Tard submitted a second offer to buy the Japanese giant — this time raising Seven & I’s valuation more than 20%.
The deal would be worth around $47 billion and, if it happens, would be the largest acquisition of a Japanese company by a foreign one.
With all of that in mind, I wanted to revisit a piece I wrote about 7-Eleven, including an old urban legend between two American convenience store chains that you would never expect to happen today.
Sometimes, A Handshake Is All You Need
In the mid-1950s, Tulsa, Oklahoma native Burt Holmes was traveling to Dallas.
During that trip, Holmes noticed a string of 7-Eleven convenience stores that were packed at every stop.
Holmes got the idea to open a chain of small grocery stores together with a former junior high classmate, Chester Cadieux.
He called those stores QuikTrip.
By 1971, Holmes and Cadieux bought Wichita-based Shopeze and expanded QuikTrip to 120 stores across Oklahoma and Kansas.
QuikTrip’s rapid rise was happening everywhere except in Oklahoma City, the crown jewel of the Kansas-Oklahoma market.
I asked my wife about this since she worked for 7-Eleven in Wichita in her younger years to buy a car.
She told me about a gentleman’s agreement between Cadieux and Bill Brown, the founder of 7-Eleven in Oklahoma.
The two agreed that Cadieux would stay out of Oklahoma City so long as Brown stayed out of Tulsa (where QuikTrip is headquartered).
Legend has it that Cadieux agreed to the deal because Brown had given him business advice and was considered Cadieux’s mentor.
Mind you, these kinds of gentlemen’s agreements … made with a handshake… were more common practice back then.
You took a man at his word — no extensive legal team needed.
That all changed in 2005 when Japanese-based Seven & I Holdings Co. (OTC: SNVDY) made 7-Eleven a wholly-owned subsidiary.
But even after the purchase, 7-Eleven stayed out of Tulsa, and QuikTrip remained out of Oklahoma City … until this year.
In February 2024, QuikTrip finally broke into the Oklahoma City market with the opening of its first store in Moore — a suburb of the state capitol.
Where the Deal Stands Now
While you might not know the name of Couche-Tard, you’re likely familiar with the convenience store chain it operates … Circle K. It owns and operates nearly 14,000 stores worldwide.
It’s not as if Couche-Tard is a new player in the convenience store game.
After receiving the initial proposal, Seven & I officials responded as you might expect… they said the deal “grossly undervalues our standalone path.”
One thing to note is that while the outsides of Japanese 7-Eleven stores may look like their American counterparts, the insides are vastly different.
The inside of a 7-Eleven in Niigata, Japan.
Stores in Japan are more like grocery stores than convenience stores…, with shelves stocked with full meals and a wider array of food and drink options.
Seven & I are going to do what companies in their situation do… look at the deal and see if it makes fiscal sense.
If nothing else, the news of the revised offer certainly didn’t hurt Seven & I’s stock on the Tokyo Exchange:
Seven & I Stock Hits 6-Month High On Tokyo Exchange
Japanese shares of Seven & I shot to a 6-month high the day the new offer was announced.
Couche-Tard’s new offer is to pay Seven & I $18.19 per share, which is still higher than the $15.75 the shares were priced earlier this week.
There are other complexities of this deal — like antitrust issues in the U.S. — but it’s safe to say it will take more than just a handshake to get any acquisition across the finish line.
Until next time…
Safe trading,
Matt Clark, CMSA®
Chief Research Analyst, Money & Markets