Will M&A in Japan ever be the same?
Bid for 7-Eleven rattles M&A status quo
Japan’s beloved convenience store 7-Eleven is a fixture on practically every block in the country’s major cities. And as of last week, it has also been the target of an interested foreign buyer.
Canadian chain Alimentation Couche-Tard’s (ACT) interest in buying the chain’s parent company has sent shockwaves through corporate Japan, with its prized brands historically shielded from the prying eyes of potential buyers abroad.
The list of iconic brands is lengthy. There are beverage makers Asahi, Kirin and Suntory, which fill up the country’s abundant vending machines. Then there’s Nintendo, Mitsubishi, chocolate maker Meiji, skincare brand Shiseido, Yamaha and Canon.
All of them suddenly feel within takeover grasp of strategic companies and private equity firms around the world, the FT’s Leo Lewis writes. One M&A banker said: think of a Japanese company, and there is someone, somewhere, wondering whether they should pounce.
The shift comes as a result of ACT’s unsolicited interest in 7&I Holdings, the Tokyo-listed parent company of 7-Eleven, which has a market valuation of $36bn.
For decades, would-be foreign buyers have gotten nowhere in Japan. This is at least in part because companies have never been forced to prioritise shareholder interests.
The Tokyo Stock Exchange is filled with companies with global name recognition that are seriously undervalued. The C-suite has historically had a great deal of flexibility and hasn’t had to take unsolicited offers seriously.
There’s a reason for ACT’s boldness. The yen has probably already bottomed out and activist investors have become an accepted part of the market.
But perhaps the biggest shift came last year, when the Ministry of Economy, Trade and Industry (Meti) changed takeover guidelines to prod CEOs to take offers seriously.
The hope was to stimulate domestic consolidation, but it might have the unintended effect of opening up Japan’s most famed companies to foreign interests.