By Riccardo Colombo, Lorenzo Mirone and Federico De Rosa (Università Bocconi)
Overview of the deal
Acquirer: Seven & i Holdings (7-Eleven)
Total Transaction Size: $21bn
Closed date: Expected Q1 2021
Target advisor: Barclays and JP Morgan
Acquirer Advisor: Nomura, Credit Suisse
On August 2nd, 7-Eleven, an American subsidiary of Japanese retail group Seven & i Holdings (S&i), entered into an agreement with Marathon Petroleum Corp. to acquire Speedway, one of America’s biggest convenience store and gas station chains, for $21bn in cash. The deal includes a 15-year fuel supply of about 7.7 billion gallons a year for the almost 4000 gas stations acquired. The deal was nearly agreed upon in March, but S&i paused after offering $22bn. Following a $1B price reduction, as well as an effective price decrease for Seven & i Holdings due to the Japanese yen strengthening against the US dollar, deal negotiations closed. Global ambitions as well as significant anticipated synergies motivated the Japanese retail group to close the deal. With the acquisition, S&i aims to move its principal interests and business away from its country of origin, Japan, where declining population, a contracting economy, and tough competition on prices are becoming problematic, and focus on the US, which has significantly better demographics and macroeconomic indicators.The Japanese group has estimated synergies upwards of $475m due to strengthened purchasing power and other benefits of scale.
Marathon Petroleum Corporation agreed to sell Speedway under strong pressure from activist investors, worried about the significant decrease of profits connected to the low price of oil and shrinking demand. The $16.5bn post-tax return will boost shareholders’ returns and will be used to reduce a monstrous $30bn debt pile.
"This acquisition is the largest in our company's history and will allow us to continue to grow and diversify our presence in the US, particularly in the Midwest and East Coast" — Joseph DePinto, President and Chief Executive Officer of 7-Eleven
Company Details: Seven & i Holdings
Seven & i Holdings Co., Ltd. is a Japanese diversified retail group founded in 1920 with the name of Ito-Yokado, classified as of 2018 the 15th largest retail group in the world and listed on the Nikkei index in Tokyo. It now owns several different brands including 7-Eleven, Ito-Yokado, Seven Bank, Sogo & Seibu, Barneys New York in Japan, and more. As a whole, the company generates more than $60bn in annual revenues. S&i operates in multiple segments of retail, including convenience stores, superstores, department stores, specialty stores, and financial services.
Founded in 1920, headquartered in Tokyo, Japan
President and Representative Director: Ryuichi Isaka
Number of employees: 144,628
Market Cap: $29.03bn (as of 8/26/2020)
LTM Revenue: $60.64bn
LTM EBITDA: $3.87bn