Convenience store chain 7-Eleven could soon be part of the largest takeover of a Japanese company if a buyout offer is approved and history is made by one of the largest Canadian public companies.

What Happened: Canadian convenience store owner Alimentation Couche-Tard Inc ( ANCTF ) has proposed an offer to buy Seven & I Holdings Co, the owner of 7-Eleven.

Alimentation Couche-Tard ( ANCTF ), which owns the Couche-Tard, Circle K, Holiday and On the Run brands, is the 13th most valuable Canadian public company according to CompaniesbyMarketCap.

The convenience store operator has bid $31 billion to buy Seven & I Holdings Co according to a report from Bloomberg. If the transaction is approved, it would mark the largest foreign takeover of a Japanese company.

The merger proposal, which is reportedly being reviewed by Seven & I, would create the world leader of convenience stores with more than 100,000 units worldwide.

Seven & I and Couche-Tard have confirmed that a "friendly, non-binding proposal' was made according to the report, with Seven & I saying a special independent committee is reviewing the offer.

Best known as the owner of 7-Eleven, Seven & I is also the owner of Denny's restaurants in Japan, a supermarket chain and a bank brand.

Read Also: Seven & I Holdings Contemplates Separation Of Retail Arm, Shifts Focus To 7-Eleven Expansion

Why It's Important: The merger of 7-Eleven and Couche-Tard would create a market leader with a strong presence in North America and beyond.

Couche-Tard has around 16,700 stores, with the U.S. (7,131) and Canada (2,142) the two largest markets by store count. Other big territories for the retailer include Germany (1,191) and Mexico (856).

The merger would combine the smaller Couche-Tarde with Seven & I, which has over 85,000 locations. Couche-Tard's higher market capitalization gives the Canadian company the edge in the merger.

While Seven & I is a Japanese company, the convenience store owner gets around 75% of annual sales from North America and 25% from Japan.

Seven & I shares soared on news of the bid, marking their biggest one day gain. Although, shares of the Japanese company have fallen 21% since the end of February.

Activist investor ValueAct Capital Management has pushed for changes at the Japanese company with a focus on the potential value unlock of 7-Eleven, which it argued could be worth more than four times the value of Seven & I as a standalone business.

Couche-Tard has expanded into new territories through acquisition previously, and saw a $20 billion bid to buy European retailer Carrefour called off over concerns from the French government in 2021.

The proposed Seven & I deal could see regulatory pressure in North America, with the combined company the owner of over 20,000 units in the U.S.

Seven & I previously purchased the Speedway gas station and convenience chain from Marathon Petroleum in 2021 for $21 billion.

The merger between the brands could recall a 2014 restaurant merger for some investors. Canadian coffee chain Tim Horton’s merged with Burger King in 2014. The two restaurant companies are now part of Restaurant Brands International and have a large footprint of stores in the U.S., Canada and other markets.

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