Fighting the acquisition by Canadian rivals, 7-Eleven's Japanese parent company has announced a major business shakeup, including the appointment of its first foreign-born chief executive.
Seven & I Holdings said Thursday that Stephen Dux, 64, a member of the company's board of directors and longtime US retail operations officer, will be his next CEO. He also said it plans to hold an initial public offering for its U.S. convenience store business, which operates more than 13,000 Class 7 branches in the country.
The move is the company's latest attempt to prevent it from acquiring itself by retail group Alimentation Couche-Tard. The Canadian owner of the Circle K convenience store chain offers roughly $47 billion to manage Seven & I, the largest foreign-led bid ever for Japanese companies.
Japan's corporate landscape, which has resisted change in many respects for decades, has begun to change in the face of an influx of attention from foreign investors. In Japan, its combination stores are considered part of the national infrastructure, Seven & I and my remodeling are the latest examples of that transformation.
Activist investors have long pushed Seven & I to spin off the seven convenience store business. The move claims to improve the valuation of the vast retail group and bring benefits to shareholders. Seven & I also said they plan to increase value by planning to buy back more than $13 billion in stock by fiscal year 2030.
The move comes as the company's options have decreased to resist the acquisition by Couche-Tard. At the end of last month, a bid from Junro Ito, the son of Seven & my founder, went private after failing to secure the necessary funds.
Ito's proposal was supported by some of the top ranks of the company who saw 7 = even as a way to hold it in Japan. The belief was that founder family-driven acquisitions could help maintain a culture that prioritizes values such as quality and customer experience over what is typically seen as a Western focus for shareholder returns and great profits. Couche-Tard says he respects and tries to learn from the way Seven & I operates.
When Dacus stepped into his new role in May, he must convince shareholders that his leadership team, led by my new structure and others from existing management, can drive growth without the need for sales.
Seven & I'm a past leader and current CEO, Ito Ryuko, was a Japanese executive who rose to the internal ranks. In contrast, Dacus has held top positions in many global brands. Dacas, who speaks fluent Japanese and English, has worked in the Japanese retail industry for many years, including stint as the parent company of Uniqlo and CEO of Walmart Japan.
Under Ithaca, Seven & I have tried to make it more valuable by moving from a low-performing company to concentrate on seven stores both in Japan and overseas. In October, the company announced plans to spin off its supermarket division and other peripheral units to another holding company. We also set a target to double annual sales to approximately $200 million by 2030.
However, in recent months, profits from Seven & I's convenience store business have been stagnating in Japan. The situation is getting worse in overseas markets like the US. For the three months ended in November, operating profit from 7&I's overseas convenience store business fell by a third from a year ago.
Before the announcement on Thursday, 7&I shares fell more than 6% since the beginning of the week when the Japanese media report said it was scheduled to reject Couche-Tard's offer. Seven & I refused to report saying they were still considering bidding.
Due to weak growth and increasing pressure from investors to negotiate a deal with Couche-Tard, Seven&I has come to view Dacus as a top candidate for work. This was true even if he was heading an independent committee assessing Couche-Tard's offer to buy Couche-Tard, according to anyone familiar with the issue he spoke to while anonymous.
