Sushi synergies
An inconvenient takeover
Good morning, coffee connoisseurs. This is your Stock Market Rundown for August 30th, 2024. Thanks for joining me. Let’s dig in:
TODAY’S TOP STORY: JAPANESE JACKPOT
Western travelers to Japan often come home raving about the country’s convenience stores, better known as konbini. A Japanese convenience store is the spot to pick up some delicious ongiri for lunch, and a bottle of sake to wash it down.
It’s also where you can pay utility bills, pick up packages, and buy event tickets. In fact, Japanese convenience stores are so awesome, the Canadians decided they want in on the action.
Quebec-based convenience store operator Couche-Tard has made a bid to acquire Seven & i, which operates 21,000 7-Eleven stores in Japan. The potential $38 billion deal would be the biggest-ever overseas buyout of a Japanese firm.
Couche-Tard is already a mega-giant of convenience stores and gas stations, owning brands like Circle K, On the Run, and Corner Store. If you’ve done a cross-country road trip in the USA, you’ve definitely pumped gas at a location owned by Couche-Tard—and maybe treated yourself to a Klondike Ice Cream bar, too. Hey, you earned it after four straight hours of highway driving.
Now, Couche-Tard is aiming to enter the Japanese market with this acquisition. But will the Japanese accept their iconic konbini being controlled by a foreign entity? In the past, Japanese corporate culture has been protectionist—and it looks like Seven & i management is playing defense.
They’re angling for protection from the Japanese government, arguing that convenience stores are critical infrastructure. I get it: if office workers can’t get their ramen noodles and Diet Cokes, there could be chaos.
Couche-Tard isn’t giving up easily, though: their management team is dialing up their network of capital providers to drum up dough for the deal. I’m sure they’re promising investors that they can squeeze tons of synergies out of the Japanese 7-Eleven locations… after all, they’ve got plenty of practice squeezing every last cent out of a cup of gas station coffee.
SO WHAT ELSE IS GOING ON?
Ross Stores raised its profit forecast for the year, thanks to bargain-hunting consumers. Ross is my go-to destination when I want to buy a nonstick frying pan, a polyester cardigan, and a ceramic garden gnome all at the same store.
Goldman Sachs just lowered their odds of a US recession in the next year from 25% to 20%. In other news, UBS raised their odds of a US recession from 20% to 25%. By the time they move the odds to 50/50, we’ll probably all already be laid off.
Could Peloton finally be out of the ditch? The exercise-bike company beat estimates and reported sales are up. Quite a turnaround, because ever since the pandemic, revenues have been declining like a Tour de France rider hitting a steep descent in the Alps.
Central bankers met this week in Jackson Hole, Wyoming for the Fed’s annual powwow. It’s like a bachelor party, but instead of Fireball shots and strippers, there are slide decks of inflation data and Jerome Powell trying to explain quantitative easing over a campfire.
That's the end of today's briefing, pals. Have yourselves a splendid long weekend, and let’s reconvene next week. Yours in capitalism, The Axe
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