Stephen Dacus: Convenience Store Prince?

Based off the FT articles:

Keohane, D. (2025). Seven & i set to list North American 7-Eleven store business. Financial Times. https://www.ft.com/content/aa51ddce-3930-49ae-9f99-e6e629ada7ec

And

Keohane, D. & Dempsey, H. (2025) The US CEO thrust into Japan’s biggest takeover battle. Financial Times. https://www.ft.com/content/e20b33db-e4de-435a-b24a-b1b817ef7fe7

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Who is Stephen Dacus and What's Going On?

Stephen Dacus is the newly appointed CEO of Seven & i Holdings, Japanese parent company of popular convenience store 7-Eleven with 13,145 stores in the US and Canada. Facing a $47bn takeover bid from Canada’s Alimentation Couche-Tard (ACT), the retailer has turned to Stephen Dacus to fend off ACT’s advances and prove the company can thrive independently. Dacus has a great task in front of him. ACT’s ¥2,700 ($18.56)/share bid overshadows the current ¥2,150 ($14.87) price. Investors, fatigued by years of sluggish reforms, are demanding urgency in value creation from Dacus.

Dacus believes taking ACT's deal is not in the best interest of Seven & i's shareholders because of anti-trust law in the United States. As 7-Eleven and Circle K (owned by ACT) are the two largest competitors in their industry, it's almost certain the USA will investigate the merger in the context of anti-trust law. While he is expected to continue talks with ACT, he is fearful of a multi-year court case possibly resulting against the interests of Seven & i shareholders. 

Dacus' plan:

1. Launch an IPO for the North American segment of 7-Eleven by late 2026, but retain majority ownership.

2. Use the proceeds of this sale as well as capital from the sale of non-core assets to carry out a share buyback programme worth up to ¥2tn ($13.7billion) by 2030.

3. Implement a new progressive dividend policy.

4. Further global expansion, retaining control as opposed to making licensing agreements.

Theoretical Analysis

For me, Dacus' plan reeks of managerial overconfidence. While on paper the plan aims to unlock value, streamline operations, and signal growth, I see a lot of room for failure. My doubt for the success of this plan is heightened as at the time of writing this, the global stock market is falling dramatically amid Donald Trump's new tariff policies, creating fears of a global trade war. 

The first step of Dacus' plan to be the sale of a crown jewel is concerning and appears to reflect Ruback's (1987) warning that getting rid of valuable assets as a means to deter acquisition harms shareholders. As North American 7-Eleven is one of ACT's largest competitors, ACT's acquisition of Seven & i is motivated by gaining access to Seven & i supply chain efficiencies and market share to increase their dominance in the industry. By selling a valuable asset that ACT is after, Dacus likely plans to hit two birds with one jewel, raising capital for the rest of his plan while simultaneously decreasing ACT's inclination to buy out the business. 

Furthermore, when an acquisition goes through, target company shareholders benefit more in the short term than the acquirer does. It's possible that through Seven & i refusing to sell ownership to ACT, shareholders will lose twice. ACT’s bid offers a 25% premium for shareholders, while Dacus’s plan banks on speculative future gains. 

The Future of Seven & i 

I believe it's likely Dacus is making a mistake and therefore agree with his decision to continue talks with ACT. This way, if he decides he is unable to create the value his shareholders demand, he can cut his losses and sell. His current plan is bold, but I wouldn't be surprised if he's proven overconfident in the next few years. Amid a dramatic downturn in global stock markets, Dacus might very soon find Seven & i with a lower valuation and regret not selling when they could. 

Additionally, there is no guarantee in 2026 (when the IPO is announced) investors will be willing to purchase ownership in 7-Eleven, especially if they won't be acquiring a majority stake. It's also very likely that consumer spending habits may shift in the coming years due to increased prices of goods. With Seven and i's core being convenience stores - known for charging extra due to the value of "convenience" - I don't find it an unlikely concept that consumers will become more price-conscious and pull away from more expensive retailers such as Seven & i. While the same negative effects of the Trump presidency will also effect competitors such as ACT, ACT's offer won't be available forever. Dacus is taking a huge risk and shareholders will be left in a very bad spot if his plan crashes and burns.

With ACT’s bid ticking like a clock amid a foreboading global economy, Seven & i’s fate now hinges on whether Dacus can defy expectations to turn Seven & i Holdings from a toad into a princess.

References

Ruback, R.S. (1987). An overview of takeover defenses. In Mergers and Acquisitions (pp.49-68). University of Chicago Press