Sometimes it can be amazing for consumers to realize that a particular chain of stores they know originated from one country is actually owned by a company in another. Case in point, the 7-Eleven convenience store chain, which began in the US way back in 1927-28 (under a different name until the current one adopted in 1946), is presently owned by the diversified international retail group Seven & I Holdings from Japan. While most of its other subsidiaries catered to Japanese, 7-Eleven is the one they had with a strong US and global presence, until Seven & I Holdings announced a surprise acquisition of another American chain, of gas stations.
CNN reports that Seven & I Holdings, the Japanese parent firm of 7-Eleven, is buying the Speedway gas station chain, a subsidiary of Marathon Petroleum. The deal was revealed by the two companies in an official statement released just this Sunday, August 2. According to Seven & I Holdings, this is their biggest acquisition yet in company history, and certainly the biggest subsidiary buyout to be done during the COVID-19 pandemic. Moreover, the acquisition was paid for in cash, with Seven & I Holdings giving Marathon $21 billion for Speedway.
This is a strategic business move by the Japanese firm, which is looking to go further international in response to the oversaturation of the Japan market, which already has plenty of their local department stores Ito-Yokado, Sogo and Seibu, as well as Seven Bank. While 7-Eleven (part of the company umbrella since 2005) is a start, acquiring Speedway – which parent company Marathon Petroleum has been announcing to spin off since October 2019 – would pick up around 4,000 gas stations with attached convenience stores located in 47 out of 50 US States. That could be the biggest market boost Seven & I Holdings would have yet.
Despite the sound reasoning for this transaction, the sheer size of the acquisition value by the Japanese firm during uncertain times has caused Japanese investors to worry. This resulted in a close to 9% drop in Seven & I Holdings shares at the Tokyo Stock Exchange. After all, its home-front subsidiaries have been affected by their own local community quarantines and business closures in response to the COVID pandemic. While Speedway will officially be part of Seven & I by the first quarter of 2021, it will still come with an expected net profit tumble of 45% by that time.
Image from Nikkei Asian Review
Morgan Magazine 