The deal is expected to accelerate 7-Eleven's growth trajectory and diversify its presence in the United States. The operator currently has more than 9,800 stores across the U.S. and Canada, and with Speedway's portfolio of approximately 3,900 stores, the acquisition will bring the Irving-based retailer's total number of stores to approximately 14,000 in North America.
Following the transaction, 7-Eleven will have a presence in 47 of the top 50 most populated metro areas in the U.S., positioning the company as a clear industry leader in a fragmented industry with favorable macroeconomic trends, according to the company.
"This acquisition is the largest in our company's history and will allow us to continue to grow and diversify our presence in the U.S., particularly in the Midwest and East Coast," said 7-Eleven President & CEO Joe DePinto. "By adding these quality locations to our portfolio, 7-Eleven will have the opportunity to bring convenience to more customers than ever before."
Speedway, with annual pre-synergy run-rate EBITDA of approximately $1.5 billion prior to the acquisition, positions 7-Eleven with significant opportunities for future growth. The c-store retailer expects to achieve $475 million to $575 million of run-rate synergies.
The deal is also expected to produce compound annual growth in 7–Eleven's operating income and EBITDA of more than 15 percent through the first three years following the close of the acquisition. 7-Eleven expects to reduce its debt-to-EBITDA ratio to less than 3 times within two years following the close of the acquisition.
According to the Nikkei Asian Review, the acquisition of nearly 4,000 Speedway c-stores will widen Tokyo-based Seven & i's lead over Alimentation Couche-Tard in the U.S. c-store landscape. Laval, Quebec-based Couche-Tard is the parent company of Circle K.
"7-Eleven in the U.S. is the most important driver leading the group's growth," Seven & i President Ryuichi Isaka said at a telephone press conference on Aug. 3, adding that it is on the way to becoming "a global distribution and retail company."
Other benefits of the deal include:
Combined store network significantly enhances economies of scale
According to a press release from 7-Eleven, the retailer and Speedway will share best practices to deliver products and promotions based upon customer demand and continue both companies' legacy of innovation. In addition, the combined company will be well-positioned to maximize efficiencies and optimize relationships with vendors and business partners.
Successful integration
7-Eleven plans to form an integration steering committee with representatives from the leadership of both 7-Eleven and Speedway. Approximately 40,000 members of the Speedway team will be integrated into 7-Eleven.
Continued commitment to environmental stewardship
Together, the combined company will set mutual and shared 2027 targets to reduce CO2 emissions, to utilize more ecofriendly packaging and sustainable food supplies, and to drive reduction in plastic usage.
The transaction is subject to customary regulatory approvals and closing conditions.
Nomura Securities International Inc. and Credit Suisse are acting as 7-Eleven's financial advisors. Both advisors provided 7-Eleven's Board of Directors with a fairness opinion.
Affiliates of Credit Suisse and Sumitomo Mitsui Banking Corp. (SMBC) provided committed financing for the acquisition. The companies also provided financial advisory services to Seven & i Holdings Co. Ltd.
Akin Gump Strauss Hauer & Feld LLP and Nishimura & Asahi are providing legal counsel.
7-Eleven operates, franchises and/or licenses more than 71,100 stores in 17 countries, including approximately 11,800 in North America.