Seven & i Holdings Co, the world’s largest convenience store franchiser, agreed to buy Marathon Petroleum Corp’s Speedway gas stations for US$21 billion, betting that an expanded US footprint will deliver growth amid the uncertainty of the pandemic.
The transaction, to be paid in cash and partly financed using debt, will add about 3,900 stores to 9,800 locations operated by the retailer’s US-based 7-Eleven unit, the Tokyo-based company said in a statement yesterday.
The deal is the second-largest purchase of a US target this year and the biggest yet for Seven & i, a retail giant with 69,000 stores worldwide, including 7-Eleven outlets and Ito-Yokado supermarkets in Japan.
Seven & i spent US$3.3 billion three years ago to buy Sunoco LP gas stations and convenience stores in a push to expand its US footprint.
“This is a historic first step as we seek to become a global retailer,” chief executive officer Ryuichi Isaka said on a conference call yesterday.
Marathon follows a long line of energy companies that are shedding retail networks to focus on making fuel.
The deal, the biggest in the oil sector since the COVID-19 outbreak, comes as retailers look to shift their focus amid the pandemic, which has further upended a sector already being impacted by the onset of e-commerce.
Marathon said it would use US$16.5 billion in after-tax proceeds to reduce debt and bolster dividend payments.
Isaka has overseen a broad restructuring of the Japanese firm since taking the helm in 2016, with a focus on expanding in the US.
Seven & i has been pressured by a saturated convenience store market in Japan and a tight labor market that makes its 24-7 operating model challenging.
“Japan’s convenience store market is at its limit as the population ages,” said Hiroaki Watanabe, a logistics analyst and author of a book on Japan’s convenience store industry. “There will be a short-term impact from the coronavirus in the US, but long-term the population there will keep growing.”
North America accounted for about 40 percent of the company’s sales in the latest fiscal year, up from about one-third five years ago.
Speedway’s store count has tripled since 2011 across 36 states.
Seven & i will raise about US$1 billion by selling off overlapping US stores after the transaction, Isaka said on the call.
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