Canada's Couche-Tarde-Circle K Attempting Takeover of 7-Eleven

Getty Images / 7-ELEVEN, Inc.

It sometimes comes as shock to North Americans that 7-Eleven is owned by the Japanese. It has been since 1991 when it bought a bankrupt Southland in Dallas, Texas that owned the company. The late 1980s and 1990s saw major purchases by Japanese companies of assets in North America. At the time it caused all sorts of fear. However, Sony and 7-Eleven among them, have been  good owners of these assets. Perhaps, they might have been run better because they were Japanese.

At the moment Nippon Steel is trying to takeover U.S. and both Republicans and Democrats are vowing to block the deal. The U.S. steel manufacturer says that without the takeover thousands of American jobs will be lost. With this in mind. a decision either way on the steel purchase could factor in on the 7-Eleven purchase by Canada's largest convenience store owner. If the steel deal goes through, questions will arise about the ability of takeovers going the other way. If the deal doesn't go through, Japan can make similar arguments about why the 7-Eleven deal should not go through.

Circle K has been around as a brand in western Canada since 2018. It was part of a re-branding of the Mac's Stores that dotted the city for decades. Mac's logo once had been a cat's head that eventually became a red owl. Circle K's owner Couche-Tarde essentially means "night owl." 

The first acquisition bid by Circle K has been rejected as being too low and not taking into account antitrust. The combined assets of 7-Eleven and Circle K in North America could bring calls for a sell off of some stores and gas stations. A Circle K and a 7-Eleven on the same corner from one another would hardly be competitive. 

People in Winnipeg are familiar with this with Sobeys and Safeways using the same flyers while often being across the street from one another. Sobeys was required to sell some stores in Winnipeg to complete their purchase but there are still many stores very near one another. This is the case across much of western Canada.

The owners of 7-Eleven have asked the government to declare the company part of their national security core assets. The Japanese government seems reluctant to do that since the company essentially bought a U.S. company and asking that it be declared forever Japanese could hurt other trade. As mentioned before, Nippon Steel's deal for U.S. Steel depends on each country mostly staying out of it except where it comes to antitrust.

While 7-Eleven might have the same owner in Japan and Canada, they operate with their local customers in mind. However 7-Eleven has far fewer locations in Canada than what is found in Japan. In Canada all magazines have been purged from the stores. There used to be a whole row. Japanese 7-Elevens still have a row of them. It is not uncommon to see 20 or 30 people casually reading inside stores. Some stores are dropping the magazines but it is at a slower pace that it has been for Canada.

What Japan has purged are Slurpee machines in some stores. They just not big sellers compared to Canada. In some stores there a 20 flavours of Slurpees lined up along with the Big Gulp dispensers. Japan sets up more space for food sales, especially, rice balls known as onigiri. Chicken and other items are fresh every day at the store. With literally thousands of stores in Japan, deliveries are made multiple times a day of product. Canada has under 620 7-Eleven stores for the whole country. Winnipeg has many stores but at least four due to issues of lease or crime have closed.  The city could lose ten more and crime has been blamed by top execs of the corporation.

Canada has its own executive offices of 7-Eleven in Surrey, B.C. and world-wide executive offices are in Irvine, Texas. Ownership and management of 7-Eleven is in Tokyo. Canada has it's execs appointed by world head office. For the first time in 15 years it is headed up by a Canadian.

All things being equal, a takeover of Circle K by 7-Eleven is just as likely a scenario. The issues of antitrust would still apply. The 7-Eleven company has outbid Circle K a number of times for U.S. assets. The only reason Circle K appears stronger is that they have been assessed as having more market value and are favourable to shareholders.

If Circle K takes over 7-Eleven, it might eventually get approved by their board only if there is a plan that the U.S. and Japan and other countries can agree on. In Japan the Fair Trade Commission could order some aspects of 7-Eleven divested such as banking or other aspects of the business. However, since Circle K is not in the Japanese market in a big way, it will be curious what concerns they might raise.

While 7-Eleven is a very successful company, it is has underperformed the market for five years. It is has not increased shareholder value despite acquisitions. The market valuation for the company is below Circle K which has had very successful shareholder increases. There are shareholder activists in 7-Eleven who are pushing the company to do better. They might not support the Circle K bid based on not enough money offered but they won't support the company running to the government to thwart the takeover based on nebulous national security claims. Nor will the government likely allow two Japanese konbini companies to combine to take a 60% presence in Japan just to keep out Circle K.

As good a company as 7-Eleven is, the low shareholder value makes them vulnerable. Couche-tarde has asked for a meeting to see what the board of 7-Eleven might be looking for. It is a meeting that that they can't easily rebuff. If 7-Eleven itself is looking for new acquisitions around the world, it can ill afford to look as if they can buy assets and no Japanese asset is available for sale due to their efforts and government protection. 

Make no mistake, the thousands of 7-Elevens in Japan have become part of the culture and a critical supply chain provider of so much. I was present when in Japan when the purchase took place in 1991. The stores were popular but in the last decades they have taken off and are clearly everywhere. Other konbini stores that are prolific are FamilyMart, Daily Yamazaki and Lawson. In my hometown on Tsuru, I had a Daily store and a FamilyMart within walking distance. I preferred FamilyMart for their fresh sandwiches. However, both had fresh foods I liked that they were close. A 7-Eleven was about a 20 minute drive from by scooter so I went there from time to time. Back then the Slurpees were limited to a few flavours and like a lot of Canadians outside Canada, I felt the Slurpees were different and not as good. I have felt this way about Slurpees in the U.S. as well.

As far as the rest of the store went, it had snacks and product not found in Canada. Fresh sushi is always there as well as rice balls. However, at Japanese 7-Elevens you can buy concert tickets and pay bills in addition to the ATM. All Japanese stores have free Wi-Fi which is a popular attraction.  It doesn't appear to be the case in Canada or the U.S. as a corporate-wide thing. It is just a few examples of how service is all about how Japanese 7-Eleven's operate.

Canada does innovate in ways unique to its market. Throughout Canada, a large number of stores will be serving alcohol in a small lounges. In Winnipeg that will be at their Ness location where 10 seats will be reserved for 18 and older for cider, beer and wine. The area will be open 12 to 11 every day. Some people thought it was a bad idea but some people thought movie theatres and alcohol was a bad idea and today Cineplex in Canada outperforms the market.

Some 7-Elevens in Canada sell gas but it is seen less in Manitoba than other areas. Circle K in North America is more likely to be a seller of gas. Another offer is likely for 7-Eleven  from Circle K soon. However, it is entirely possible that Circle K makes an approach to Mitsubishi to buy Lawson instead. The convenience store subsidiary is enormous as well and might be more amenable to a purchase offer.

Regardless if Circle K and 7-Eleven become one company, it is likely they will continue to innovate and offer more fresh food. In Winnipeg, the big question is how will 7-Eleven and other convenience stores deal with the issue of crime. In Japan crime is not something most of the stores have to worry about. In much of Japan, vending machines are everywhere which seems impossible in much of Canada. 

If the companies ever combined in Canada, it would mean the 2,100 stores of Circle K and the 620 stores of 7-Eleven would start to have the synergy that Japan has to keep prices down and deliveries coming a few time a day. It still would come close to the amount of stores Japan has and how much competition there is.

Media Changes in North Dakota and Minnesota

Media shake-ups abound on both sides of the border. in 2024, Winnipeg Sun was spun off from National Post media group to locally owned Kevin Klein Group. It marks the first time that both major newspapers in the city have been owned locally in their history. For the Sun, it has led to more local news columnists. It also led to breaking more stories.

The Winnipeg Free Press has also added more local columnists over the years even if some have been controversial such as Charles Adler. Local is what newspapers and TV/Radio news need to stand out and yes, make money. Large conglomerates cut and cut again and then often just close and add the tax loss to write off debts. They are rarely builders. Free Press ownership is shared by Winnipegger Bob Silver and former Winnipegger Ronald N. Stern.

Two local owners of major newspapers in Canada is so unusual that is you can count on three fingers the cities they are in. For the west, it is only one city: Winnipeg. And so far they are fighting a battle against what many in Europe call the six gatekeepers: Amazon, Alphabet (Google), Apple, ByteDance (TikTok), Meta (Facebook) and Microsoft. Even those who receive no government money, companies such as these can control access to their platforms. The breakdown of Microsoft update shutting down the Internet is one 2024 example of how bad things can get. And digital ad money gets swooped up and AI from these giants creates content mined from creators all over. In other words, an independent journalist who breaks a story can see it used by the biggies and not get paid for it.

The gatekeepers can do this to even larger companies too. Artificial Intelligence is being used to create new stories. But where does that information come from? It is often mined from companies such as the New York Times. If the largest newspapers, media companies and the like are vulnerable from the super giants, how do the rest of us even cope. Those saying that the government tinkering in business ignore the fact anti-trust moves are to keep things competitive in a capitalist market. For example, the modern Internet became possible when AT&T was broken up. It triggered some of the biggest investments in telecom ever seen which was essential to a widespread, faster Internet.

The questions of what to do about the supranational giants will remain the question of the day. In recent weeks, Google's search engine has been declared a monopoly by the U.S. government. It remains to be seen see what the federal agencies will decide to do. In the meantime, news and media companies are coming up with new strategies to stay relevant and profitable. North Dakota and Minnesota have seen some of their largest media companies make moves in 2024.

The Minneapolis Star Tribune has dropped the Minneapolis part and it is now Minnesota Star Tribune. This would be in keeping with their sports teams that have always been wise to using Minnesota for their NHL, NBA, NFL and MLB teams without fail. Minneapolis and St. Paul are truly Twin Cities and there are communities of some size all through the metropolitan area. Changing the name makes sense.

A competing broadsheet in St. Paul, Minnesota also dropped their city name in favour of just Pioneer Press. It is not owned locally and have experienced massive cuts over the years. In 2006 they had over 200 unionized writers. By 2023, that number was down to 23. The MediaNews Group that owns the paper and has a reputation of cuttings. Still, like the Star Tribune, it is trying to extend its readership and their website to include all of Minnesota. Their website is twincities.com which doesn't even mention Pioneer Press.

The Twin Cities also has MinnPost.com which is a non-profit digital news for the region. TV and radio stations have substantial news and sports content in Minnesota as well as North Dakota. PBS has extensive coverage of the regions. While there is less local ownership of TV and radio stations in big markets likes Minneapolis, there remains some. In this way, they are not much different than Winnipeg where nearly all local TV and radio has ownership outside Manitoba.

It is the digital audience that everyone in media is trying to capture. Just as landlines are being cut, people are cutting their print newspapers and cable. The problem is that digital ads don't pay as much as print or TV ones. Plus, the gatekeepers scoop up all the money that is there as well as use the content for their own ends. It is the definition of antitrust. 

What the big digital companies don't do as well is news that people might want or need locally. Reddit has discussions on local stuff but it isn't curated in news, weather and sports categories in the way other media is. To that end, local news and TV/radio in North Dakota and Minnesota are offering much more local appeal. Having a local meteorologist reporting is standard for TV stations in the U.S. where some of the wildest weather keeps them on our toes. Winnipeg does not make this a priority. Also, the new digital sub-channels that a station like WDAY Fargo as makes local sports a priority. Al the high school football games in the Fargo region is on the WDAY sub-channels. We don't have digital sub-channels on TV or radio in Manitoba yet and none seem to be happening in Canada. It would appear media empires and the CRTC just don't see the need. If it is Canadian content guidelines that are required, there would seem to be enough library material of older shows to put in place.

In terms of Minnesota, the 157 years old Star Tribune is hiring more writers, not less. The are focusing on placing more reporters outside Minneapolis-St. Paul and covering areas such as business, downtown, regional state issues and investigations. Cannabis stores are new in Minnesota so they will cover that. This is a familiar area for Free Press who covered cannabis with a dedicated journalist for a while. Overall, the state-wide focus means that the Star Tribune will be reaching large audiences but still remain hyper-local. Large media networks just don't cover those areas except in general terms of news, weather and sports.

There will be a lot of eyes on the Star Tribune's investment in expanded coverage. Glen Taylor, the billionaire local owner, is spending new money on top of the $100 million that he paid for the paper in 2014 has turned the paper around. It makes money and has maintained around 225 writing staff and a total of 1,000 or so altogether. The Free Press, by contrast, has 50 reporter and 580 total staff. The Free Press also have community newspapers, Brandon and Steinbach journalists which adds to total writers in Manitoba.  

The Winnipeg Free Press, like Star Tribune, have rich owners. The Free Press is owned by Bob Silver from Winnipeg and Ronald N. Stern, formerly from Winnipeg but now based in Vancouver. Bob Silver is the director in charge. Stern owns companies valued just under $2 billion including many based in Winnipeg. Some wags have suggested that only papers with deep pocketed owners, preferably local, will ever invest in local media. Examples abound in Canada and the U.S. of this.

Digital subscriptions, as the New York Times has shown, is the way for the newspapers to find success. However, the big six grow ever more powerful so that that they can simply use artificial intelligence to create news stories largely harvested from what others report. All the money flowing to the big six even threatens the major industrial nations. It is the inherent danger if antitrust is not pursued. Total monopolies bullying nations.

The Star Tribune is probably not finished evolving. Both the Star Tribune and Free Press are doing newsletters and podcasts. Those are likely a lot of better for a newspaper than X/Twitter or Facebook. As the fifth largest newspaper in America and the addition of hiring six more Minnesota reporters, it will be creating considerably content.

In Canada, TV and radio conglomerates such as Corus, Rogers and Bell use their news teams across platforms. However, they have all made cuts and likely overpaying for show rights in the U.S. This makes them routinely ask to cut Canadian content. Rarely do they use Canadian-made content such as news as part of their commercial success. The mergers and acquisitions and overpaying for product brings inevitable cuts. And for what? Some of the radio and TV stations that get bought get closed down. Often enough there isn't even an attempt to sell the enterprise. Luckily, in Winnipeg, the National Post sold three papers including the Winnipeg Sun to Kevin Klein so they could be owned locally. There is a strong possibility that the papers might have been closed otherwise.

Throughout North America, the rate of closures is about two newspapers a week. Often this mean no local coverage of any regional issues which can lead to poor performance from local officials who face no scrutiny. You don't need a billionaire for a small media company but you sure could use a leading citizen or two interested in running and operating something that can't be treated like a franchise 

with identical reporting.

The Star Tribune has a billionaire owner in Glen Taylor and a local interested in investing in more reporting. The competitive market in Minnesota will be very interesting to keep an eye on. However, Minnesota is not the only state to keep an eye on. North Dakota has seen their own local media become regional in focus.

In the case of North Dakota, Winnipeg has been able to watch the growth of this media company much more closely. Anyone from Manitoba has been able to read the Grand Forks Herald and Fargo Forum newspapers has been exposed this Pulitzer-prize winning companies. The Herald won the Pulitzer for its coverage of the 1997 flood and fire which flooded and burned down their building.  The Forum won the Pulitzer for coverage of the 1957 F5 tornado that killed over 100 people. It was the northern most F5 today until the Elie, Manitoba F5 in 2007. 

The Black-Marcil family have built their business from the Fargo Forum platform. The newspaper was started in 1878 and took on the name Forum in 1891. The Black-Marcil family have owned it since 1917 and took over the Grand Forks Herald in 2006. Forum Communications is also a TV and radio owner. Most in Winnipeg will be familiar with today's WDAY (formerly WDAZ) that has been on the cable band for decades. Along with Prairie Pubic Broadcasting (PBS), these two station remain the only North Dakota stations still seen in Manitoba.

Forum Communications, from their Fargo headquarters, has run a large news team from their newspaper as well as their TV station. WDAY began in 1953 and was originally a NBC affiliate with a helping of other network programming from CBC, ABC and Dumont. A sister station in Grand Forks was started in 1967 because the region needed a station since Fargo's signal was now powerful enough to reach the area with CBC Winnipeg's broadcast. WDAZ ended in 2006 except for a news bureau of WDAY.

The Marcil family has had to adjust to the size of the state and but to go where their audience is. The state capital is down the highway from Fargo and has to be covered so a Forum bureau reporter is based there. The WDAY network maintains a bureau and sales office in Grand Forks. All of the newspapers that Forum Communications has purchased from big media companies have been folded into a news service that covers North Dakota, Minnesota and South Dakota.

In 2024, Forum Communications continues to pick up independent TV stations in places like South Dakota with the intent of establishing a regional media presence. The company has been expanding rather contracting. While it was a blow to Grand Forks to lose WDAZ, the trade off has been great state broadcasting of local sports throughout the region including Grand Forks. No national media corporation will ever be interested in this type of work.

Forum also owns WDAY radio but literally everything in radio is owned by huge conglomerates. Forum contracts out management to a North Dakota media group. Almost everything in American AM radio is conservative or Christian broadcasting. In many cases there is not a single employee working aside from some technical person. It has been problematic in disasters as there is often no one to even broadcast emergency signals as mandated by the FCC.

Bismarck, which is the second largest city in North Dakota, literally has no media that is locally owned. Were it not for  Forum Communications, it would not have any North Dakota owned media. So much of newspaper, TV and radio industry is controlled from somewhere else and often, they would rather shutter the business than attempt to sell it. It has been Forum Communications that has picked up these assets when they have come available.

In Canada and the U.S. we have seen newspapers, TV station and radio stations closed down with very little attempt to find buyers. Assets are trades by big corporations and then dumped after after a while. It is only local owners who will care such as we see in Minneapolis and Fargo or in Winnipeg. And the goal of the local owners is to expand coverage and reach a larger regional audience.