Seven & i takeover bid by Canadian retailer faces Japan gov't review

The proposed acquisition of Japanese retail giant Seven & i Holdings Co by Canadian convenience store giant Alimentation Couche-Tard Inc is subject to review by the Japanese government to assess any potential threats to national security, sources close to the matter said Thursday.

The operator of the Seven-Eleven convenience store chain is covered by the Foreign Exchange and Foreign Trade Act, which governs foreign investment in Japanese companies to prevent leaking technologies that could be diverted for military purposes.

Under the law, listed domestic companies and their subsidiaries engaged in designated industries such as aviation, cybersecurity or infrastructure, are required to notify the government if foreign investors acquire a stake of 1 percent or more.

Although convenience store operations, which are Seven & i's core business, are not among the designated industries, the Finance Ministry has applied the rule to the firm. It has not, however, disclosed which of Seven & i's businesses the rule applies to.

The notification to the Japanese government must include details on the scale and timing of the foreign investment, as well as the extent of the foreign investor's involvement in management.

The government can block the investment if it deems the acquisition would cause issues with economic security. Failure to provide notification or providing false information can result in imprisonment or fines.

Numerous corporations sit under Seven & i's umbrella, with the holding company owning shares in firms in industries such as retail, real estate, finance, livestock farming, petroleum product sales and security services, according to its articles of incorporation.

Seven & i said earlier this week that it had received a nonbinding preliminary proposal from Alimentation Couche-Tard, which runs brands including Couche-Tard and Circle K, to acquire all of its outstanding shares.