Seven & i now classified as 'core' to Japan's national security

TOKYO - Japanese retail giant Seven & i Holdings has been classified as "core" to national security, according to an updated finance ministry list released on Friday (Sept 13).

The classification has raised questions as to whether it is a defensive manoeuvre by the owner of 7-Eleven convenience stores which last week rejected a US$38.5 billion (S$50 billion) buyout offer from Canada's Alimentation Couche-Tard. Couche-Tard is discussing whether to raise its offer price, according to a Bloomberg report.

However, Seven & i's new status doesn't necessarily raise any additional hurdles to a potential Couche-Tard takeover.

When a company is categorised as core, foreign entities seeking to buy a stake of one per cent or more in a Japanese firm must in principle file for a national security review with the Japanese government.

But in cases where a full buyout is sought, a review is mandatory for companies like Seven & i which are considered significant to Japan's economy or security regardless of whether they are categorised as core or non-core.

The classification does not change the level of government scrutiny or the review process for any bid to acquire an entire company, a ministry official said.

Seven & i said its classification was not related to Couche-Tard's buyout proposal.

The ministry's classification list is based on responses from all listed companies to its surveys and is updated almost every year.

Seven & i was among 88 companies newly added to the list, which generally spans sectors such as nuclear power, space and semiconductors.

While convenience stores, Seven & i's mainstay business, would not count as a sector that would require a national security review, the group has wide-ranging businesses including financial services as well as security services for commercial facilities.

Seven & i said last week Couche-Tard's offer was not in the best interests of its shareholders and could face antitrust challenges in the US, where the combined company would be the biggest convenience store operator by a considerable margin.

US antitrust regulators have told Seven & i that they may probe a potential deal with Couche-Tard, sources have said.

Sources have also said the Japanese company has tapped Nomura to advise the company's special committee about a potential takeover by Couche-Tard. Seven & i and Nomura declined to comment.

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