Will Canada get Japanese-style 7-Elevens? What a Couche-Tard takeover could look like

It’s a historic corporate courting — Quebec-based Alimentation Couche-Tard Inc. offered a takeover offer to buy the Japanese owner of 7-Eleven, Seven & i. The Japanese company rejected the latest offer, but left the door open for more negotiations. And Couche-Tard is still peacocking, boasting its confidence that a deal, that would see it add nearly 85,800 stores across the world to its network, will get done.
A blockbuster deal, if it happens, would see Couche-Tard, which already has more than 17,000 stores across the world, take over the largest operator of convenience stores in the world. The merger has caused buzz from people in Japan, cautious about a Canadian takeover of an everyday staple store, and from North Americans optimistic about the prospect of Japanese-style convenience making its way across the Pacific. 
There are a lot of “ifs” in the equation — talks are still ongoing as Couche-Tard pushes aggressively for a takeover, which means a long road before egg sandos and onigiri rice balls may appear in your local corner store. 
Couche-Tard made the first move on Aug. 19, offering an all-cash offer worth about US$14.86 per share for Seven & i, the Japanese owner of 7-Eleven stores across the world, valuing the company at US$38.6 billion.
Seven & i rejected the offer last week, and said in a letter that the takeover offer “grossly undervalues” the Japanese company, was not in the best interest of its shareholders and other stakeholders and raised regulatory concerns.
In a Sunday statement, Couche-Tard said it’s “highly confident” further discussions would lead to the ability to find increased value for Seven & i shareholders and the company continues to chase a deal.
Seven & i said in a statement Monday that it remains open to talks if Couche-Tard puts forth a proposal that “fully recognizes Seven & i’s stand-alone intrinsic value” and addresses its regulatory concerns.
The takeover offer comes a year after the Japanese government introduced new non-binding guidelines instructing companies to seriously consider takeover offers, and will be the first offer of this scale involving a foreign firm. Any deal would also require the approval of the Japanese government, as Seven & i is among companies considered important to Japanese national security. That’s on top of concerns that a combined company — which would control more than 100,000 stores worldwide — would also invite scrutiny from U.S. officials. 
Retail expert Bruce Winder is skeptical the deal will happen, just based on the lack of a “warm and fuzzy feeling” from Seven & i. 
However, he added, Couche-Tard has excelled at acquiring and integrating other companies, even if this blockbuster merger would carry greater risk.
“They’re an aggressive company and we’ll have to see,” Winder added. “Crazier things have happened in the world.” 
Expectations for a radical change for stores in Canada should be tempered warned David Soberman, the Canadian national chair in strategic marketing and professor at the Rotman School of Management. The move would mainly be a financial transaction, Soberman said — more to the benefit of shareholders than for customers.
“You don’t need to have a merger for (change) to happen,” Soberman said.
And changing consumer behaviour has already prompted new spending habits, Winder added. The classic bread and butter of convenience stores — cigarettes and gasoline — have a murky future, with cigarette sales in a continued decline since 2013 and uncertainty around gas sales furthered by the continued push for electric vehicles.
American 7-Eleven stores have made a concerted effort to diversify their fresh food offerings, creating infrastructure and partnering with food suppliers in line with the company’s Japanese convenience stores. And Couche-Tard, as a major competitor of 7-Eleven, will need to respond to those innovations in kind.
“The old convenience store offerings were pretty much what I would call junk food. You know, those hot dogs that are in a glass case that have probably been turning there for a long time,” Soberman added. Now, offerings will likely become more diverse, whether that’s from stocked food items or through franchises, like Tim Hortons or Wendy’s, that are integrated in-store.
That change could also be prompted by regulatory changes, Soberman added. Ontario just introduced alcohol to more than 4,000 convenience stores across the province and some Ontario 7-Elevens are testing out in-store drinking areas. 
“This is the way (the convenience) retail sector is evolving to being perhaps more of what we would see in Japanese conditions,” Soberman said.
Still, it’s unlikely that Canada will see an exact replica of Japanese-style convenience stores, just because consumer habits here are so different, Winder said.
“In Japan, the whole convenience store is like a monster. It’s just huge. There are so many stores and consumers buy everything there,” he said. That’s different from Canada, where convenience stores aren’t the go-to option for food, drinks and groceries. 
“But, there might be some lessons learned from Japan where they can sort of re-engage and grow the business here.”
With files from The Canadian Press.