7-Eleven: After the Acquisition

DALLAS --The acquisition of 7-Eleven Inc. by its majority shareholder places the world's largest convenience store chain in the hands of a newly formed Japanese conglomerate, reported The Dallas Morning News .

With the deal, Dallas-based 7-Eleven became a wholly controlled subsidiary of Tokyo-based Seven-Eleven Japan Co. Ltd., its hugely successful Japanese licensee that until now had owned a 73 percent stake in its U.S. counterpart.

Earlier this year, Seven-Eleven Japan agreed to become a subsidiary of a new Japanese company it helped form. In September, it teamed up with its parent company, Ito-Yokado Co. Ltd., and Denny's Japan Co. Ltd. to form Seven and I Holdings Co. Ltd, according to the report.

By taking 7-Eleven private, Seven-Eleven Japan hopes to improve the quality of the U.S. stores, where freshly made deli sandwiches are still being introduced in some parts of the country, according to The Dallas Morning News .

"We plan to increase our investment in merchandising, store renovation, distribution and logistics, and information technology to better position the company for future profitable growth," Jonathan Gasthalter, Seven-Eleven's U.S. spokesman, said in the report.

The company plans to conduct a review of 7-Eleven Inc.'s operations, management, corporate structure and properties, but Gasthalter did not know when the review would begin or how long it will last.

Earlier this year, the company announced plans to build a headquarters in downtown Dallas, which was widely viewed as a major boost to the city's revitalization efforts.

"We intend to manage this process to minimize disruption to the workforce," Gasthalter stated in the The Dallas Morning News report.

Although the acquisition could mean additional investment for the chain, it could also lead to a slowdown in the rate of new store expansion, according to the report.

With 36 consecutive quarters of higher same-store merchandise sales, 7-Eleven has been trying to open new stores and update existing ones. It expects to open around 90 to 95 new stores this year, The Dallas Morning News reported.

The $1.2 billion deal proved a boon for 7-Eleven shareholders, who received $37.50 a share. That's a 32 percent premium over the closing price of 7-Eleven shares the day before the Sept. 1 tender offer.

"It's very much in line with traditional buyouts," said Adam Sindler, a research associate at Morgan, Keegan & Co., according to the report. He added that 7-Eleven shareholders did well.

Seven and I Holdings, which is publicly traded on the Tokyo Stock Exchange, focuses on seven businesses: convenience stores, superstores, supermarkets, restaurants, department stores, financial services and information technology services.

Besides 7-Eleven convenience stores, its holdings include: the Ito-Yokado superstores, Denny's restaurants in Japan, Oshman's Japan, the York-Benimaru supermarkets and Robinson department stores.

Seven-Eleven Japan is no stranger to Big Gulps, Slurpees and Big Bite hot dogs. It controlled five of nine seats on 7-Eleven's board of directors thanks to the majority stake it gained in the company in 1991.

Opening its first 7-Eleven in Tokyo 31 years ago, Seven-Eleven Japan now operates nearly 11,000 of the stores in its home country alone. That compares with only 5,818 stores for 7-Eleven Inc. in the United States.

This ad will auto-close in 10 seconds