Photo/Illutration Masahiro Okafuji, chief executive officer of Itochu Corp., speaks to reporters in Kawasaki on March 3. (Ken Miyazaki)

KAWASAKI—Seven & i Holdings Co. will be swallowed up by Canadian rival Alimentation Couche-Tard Inc. unless it enhances its corporate value after a failed management buyout attempt, an influential business leader said.

Seven & i, parent of convenience store chain Seven-Eleven Japan Co., is planning to replace President Ryuichi Isaka with Stephen Hayes Dacus, an outside director, to win shareholder support for its go-it-alone strategy.

But Masahiro Okafuji, chairman and chief executive officer of trading house Itochu Corp., said changing the top leadership alone will not solve the company’s predicament. 

“The company must increase its value,” he told reporters in Kawasaki on March 3. “It must draw up a workable strategy. If left as is, the company will be taken over by Couche-Tard.”

To ward off Couche-Tard’s 7-trillion-yen ($47 billion) bid, Seven & i’s founding family planned a management buyout but effectively ditched the effort in late February after it failed to raise the funds.

Itochu considered providing funds at the request of the founding family but it eventually decided against investing in the management buyout.

Okafuji, who was in charge of negotiations, suggested that the buyout plan was flawed.

It called for Seven & i to be delisted after the founding family acquired outstanding shares.

But Okafuji said the proposed privately held Seven & i was “unexpectedly” unable to obtain a credit rating, a condition for receiving loans from financial institutions.

“We concluded the plan would not work after Charoen Pokphand Group Co. gave up (taking part),” he said, referring to one of Thailand’s largest conglomerates and a prospective investor.

Couche-Tard operates convenience stores under the Couche-Tard and Circle K brands in North America.

Okafuji emphasized that the management buyout plan was drawn up for “the cause of defending Japan’s national interests” by protecting Seven & i.

“Couche-Tard has grown through restructuring. If the company buys into Seven & i, money-losing outlets in depopulated areas will be closed,” he said.

“Japan’s three (major) convenience store chains have been improving the quality of services and products through competition. Industry order will be disrupted if a foreign company intrudes.”

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