Seven & i shares jump 3% on Zabka convenience store stake talks

TOKYO, July 17 : Shares in Seven & i rose 3 per cent in Tokyo on Friday as the Japanese retailer said it was in talks to buy a stake in Polish convenience store operator Zabka Group.

The 7-Eleven owner is considering acquiring Zabka shares held ​by funds, with the investment likely ​to total several hundred billion yen (several billion dollars), Nikkei reported. 

A deal would extend Seven & i’s reach into Eastern Europe, beyond its strongholds in Japan and North America, as the retailer seeks to grow its business under CEO Stephen Dacus, who took the helm last year.  

“Amid overall market weakness due to falling semiconductor stocks, defensive sectors centered on domestic demand are being bought,” said Naoshi Matsumoto, an analyst at Yamawa Securities. 

Aeon, Japan’s largest retailer, also climbed 3 per cent while memory chipmaker Kioxia fell 15 per cent. Warsaw-listed Zabka, which has more than 13,000 stores in Poland and Romania, climbed 11 per cent overnight on the news. 

In 2021, Seven & i acquired Speedway petrol stations, extending its position in the U.S. It already has outlets in three Nordic countries and has positioned Europe as a “fourth pillar of growth”. 

Seven has been struggling to improve its flagging business following a tussle with Canadian rival Alimentation Couche-Tard, which had sought to take it over in what would have been Japan’s largest-ever foreign buyout.

The retailer has been under pressure from investors due to lacklustre returns and faced calls to focus on its core convenience store business. Last year it agreed to sell off its supermarkets business to private equity firm Bain Capital.

SoftBank Corp and mobile payments operator PayPay are in talks to invest several hundred billion yen in Seven & i with Sumitomo Mitsui Card also potentially taking a stake, Bloomberg News reported last week. 

A partnership reflects “a history of digital defeat” and amounts to Seven & i “buying takeover defense with shareholders’ money,” Bernstein analysts wrote in a note. 

“Seven is plugging its largest remaining weakness with outside capital and installing friendly shareholders as a takeover countermeasure,” the analysts wrote.