7-11 To Buy Speedway For $21 Billion

Japanese retail group Seven & i Holdings will acquire Speedway, the convenience store unit of U.S. oil refiner Marathon Petroleum, for $21 billion in cash, the companies announced Monday.

The deal, which Nikkei reported earlier Monday, would be the biggest corporate acquisition globally since the coronavirus outbreak spread earlier this year.

Seven & i shares plunged  8% in early trading, falling to their lowest level since April 2013. 

Seven-Eleven and Speedway

“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.” 

Seven & i, which operates convenience store chain 7-Eleven as well as supermarkets and department stores in Japan and elsewhere, has made its American operations a growth pillar as the convenience store market in its home base of Japan has become saturated. The company is the biggest player in the U.S., operating about 9,000 7-Eleven convenience stores.

Speedway is the third-largest convenience store chain with about 4,000 outlets, while Canada’s Alimentation Couche-Tard, which operates Circle K stores, is the second largest with around 8,000 outlets.

The acquisition of Speedway, which operates convenience stores and gas stations side by side, will widen the Japanese retail group’s lead over Couche-Tard in the world’s biggest economy.

Seven & i abandoned its initial bid for Speedway this spring, failing to reach an agreement on the acquisition price in exclusive negotiations with Marathon after the price tag was raised. The price proposed was said to be about $22 billion.

But Marathon revived its bid to sell Speedway as its own business performance deteriorated due to historically low oil prices and a decline in oil demand caused by the novel coronavirus pandemic.

Official Statements

The Dayton Daily News and the Springfield News Sun have reached out to 7-Eleven to find out what the intended acquisition and buying means for Speedway’s Enon headquarters and workforce.

And a state representative from Springfield, State Rep. Kyle Koehler, has the same question. Koehler tweeted Monday that he was “working to find out this morning if this changes the fact that they are HQ’d in Clark County.”

In 2018, Marathon announced plans to expand and update Speedway’s headquarters building at a cost of about $48 million, a project that was to feature a new 140,000-square-foot structure connecting two existing buildings on the headquarters campus.

Findlay-based Marathon announced that it and certain of its subsidiaries have entered into a “definitive agreement” with 7-Eleven, Inc., a wholly owned, indirect subsidiary of Tokyo-based Seven & i Holdings Co., Marathon said Sunday.ExploreHere’s why door manufacturers love Troy

In the agreement, 7-Eleven will acquire Speedway for $21 billion in cash, Marathon said. The transaction is expected to close in the first quarter of 2021, subject to the usual conditions and regulatory approvals.

The Transaction

“This transaction marks a milestone on the strategic priorities we outlined earlier this year,” Michael Hennigan, president and chief executive of Marathon, said in a release Sunday. “Our announcement crystalizes the significant value of the Speedway business, creates certainty around value realization and delivers on our commitment to unlock the value of our assets.”

A leadership shakeup at Marathon last October positioned gas station chain Speedway LLC for what was thought at the time would be corporate independence as a publicly traded company. Since then, the company has tried to spin off Speedway.

In a conference call with analysts Monday, Hennigan said the sale will result in after-tax proceeds of about $16.5 billion to the company.

It’s also expected to mean a source of long-term business for Marathon.

“The sale also creates a long-term relationship with 7-Eleven that enhances commercial performance potential through attractive supply agreements and future growth opportunities,” the CEO said in the call.

Marathon is hoping for long-term agreements with 7-Eleven to supply nearly 8 billion gallons of fuel a year.