Seven & i Holdings Co., the world’s largest convenience store franchiser and parent company of Irving-based 7-Eleven, agreed Sunday to buy Marathon Petroleum Corp.‘s Speedway gas-stations for $21 billion, forging ahead with a deal-fueled expansion in the U.S.
Tokyo-based Seven & i said in a statement it expects the all-cash transaction to close in the first quarter of next year.
7-Eleven operates 11,800 stores in the U.S. and Canada. Speedway stores will give 7-Eleven a bigger footprint in the Midwest and East Coast and a presence in 47 of the top 50 most populated metro areas in the U.S., 7-Eleven said in a statement. 7-Eleven’s sales total merchandise sales were almost $18 billion last year and Speedway’s merchandise sales were more than $6 billion. 7-Eleven’s gasoline sales last year were more than $18 billion and Speedway’s were $20.5 billion.
The deal is the largest yet for Seven & i, a retail giant with 71,100 stores worldwide including 7-Eleven stores and Ito-Yokado supermarkets in Japan.
The Speedway purchase comes three years after Seven & i spent $3.3 billion to buy Sunoco LP gas stations and convenience stores in a push to expand its U.S. footprint. The coronavirus pandemic has rattled the retail sector, already under threat from the onset of e-commerce. Consumer companies are assessing their strategies amid that shift.
Chief executive officer Ryuichi Isaka has overseen a broad restructuring of the Japanese firm since taking the helm in 2016, with a focus on expanding in the U.S. Seven & i has been pressured by a saturated convenience store market in Japan and a tight labor market that makes its 24-7 operating model challenging.
North America accounted for about 40% of the company’s sales in the latest fiscal year, up from about a third five years ago.
Investor pressure
Late last year, Marathon faced months of pressure from investors including Elliott Management Corp. and D.E. Shaw & Co. for sweeping changes to improve its performance. Elliott had been pushing for Marathon to break itself up into three separate businesses: refining, retail and pipelines.
The company wrapped up a strategic review of MPLX LP, its publicly traded oil pipeline affiliate, ultimately deciding to retain its stake in the midstream business. Investor pressure also led to Gary Heminger stepping down as CEO in March after 45 years at the company.
American fuel makers like Marathon have been struggling to recover amid fears that a second viral wave will force more drivers off the road, particularly in some of the nation’s most populous states.
Marathon took a $12.4 billion charge in the first three months of this year while also suspending share buybacks and slashing spending by 30%.
Speedway is the second-largest chain of its kind in the U.S., with a store count that has tripled since 2011 to almost 4,000 across 36 states. Marathon follows a long line of energy companies that shed retail networks to focus on making fuel.
Bloomberg’s David Wethe and Lisa Du and Dallas Morning News staff writer Maria Halkias contributed to this report.
This story was updated to include more sales numbers for 7-Eleven and Speedway.
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