Will Japan Allow Circle-K to Acquire 7-Eleven?

🌈 Abstract

The article discusses the potential acquisition of the Japanese convenience store chain 7-Eleven by the Canadian company Alimentation Couche-Tard (ACT), and the implications this would have on the unique convenience store culture in Japan.

🙋 Q&A

[01] The Unique Convenience Store Culture in Japan

1. What makes the Japanese convenience stores (konbini) different from those in the US or elsewhere?

• The konbini in Japan offer a wide variety of fresh, high-quality food options like bentos, onigiri, nikuman, and seasonal specials, unlike the typical US convenience stores which mainly sell greasy hot dogs, stale donuts, and overpriced drinks.
• Konbini in Japan provide many services beyond just retail, such as bill payment, ticket sales, package shipping, and acting as distribution centers during natural disasters.

2. Why are the konbini so beloved by the Japanese people?

• Konbini food is not only convenient but also delicious and affordable, making them a go-to option for meals.
• Konbini are ubiquitous in Japan, with one or more on nearly every busy street corner, allowing people to easily access them for their daily needs.

[02] The Acquisition Offer from Alimentation Couche-Tard (ACT)

1. What is the key difference between the market values of 7-Eleven and ACT?

• Despite 7-Eleven having 86,000 stores worldwide compared to ACT's 16,700, ACT has a market capitalization of $57 billion, which is twice as much as 7-Eleven's $29 billion.

2. What are the potential challenges of ACT acquiring 7-Eleven Japan?

• There are concerns that ACT, as a foreign company, may not understand or preserve the unique aspects of the konbini culture in Japan, and could make changes that negatively impact the quality and services provided.
• The Japanese government may be reluctant to approve the acquisition, as it would be the largest foreign takeover of a Japanese company, going against the country's traditional resistance to foreign corporate influence.

3. How might the US government view the proposed acquisition?

• The US government may scrutinize the deal due to 7-Eleven and Circle-K (owned by ACT) being the two largest convenience store chains in the US, potentially raising antitrust concerns.

[03] The Challenges Facing Japanese Businesses

1. What are some of the key differences between Japanese and American corporate cultures?

• Japanese companies have traditionally been less focused on shareholder value and profitability, and more on maintaining their protected position within the domestic market.
• Mergers and acquisitions that involve layoffs and cultural integration are often seen as anathema to the Japanese corporate mindset.

2. How has the Japanese government's stance on shareholder capitalism evolved?

• Former Prime Minister Abe had pushed for Japan to embrace shareholder capitalism and encourage mergers and acquisitions, but the implementation has been slow and met with resistance from the traditional Japanese corporate culture.