(Reuters) - Sunoco LP (SUN.N) said on Thursday it would sell 1,110 convenience stores to Japan’s Seven & i Holdings Co (3382.T) for $3.3 billion as the Texas-based company shifts its focus to its fuel supply business.

Sunoco’s shares jumped as much as 24 percent to $29.50 on Thursday - their biggest intraday percentage rise in three years.

As part of the deal, the U.S. company will also supply about 2.2 billion gallons of fuel annually for 15 years to a unit of the operator of 7-Eleven chain of convenience stores.

Sunoco, a publicly-traded partnership controlled by pipeline operator Energy Transfer Equity ETE.N, operates about 1,350 retail fuelling sites and convenience stores under brands such as APlus and Stripes, the company’s website showed.

The company said it planned to sell another 200 stores by the end of the fourth quarter and expand its distribution business, partly through acquisitions.

Energy Transfer’s chief financial officer, Thomas Long, said there are no plans to dissolve the partnership.

Energy Transfer wants Sunoco to remain a standalone business and continue on the M&A; front to expand its business, Long said. “That is very much the directive.”

Sunoco said it expected to use the proceeds from the sale primarily to repay debt, which was about $4.51 billion as of December.

7-ELEVEN’S U.S. PUSH

Seven & i Holdings has been aggressively expanding in Japan and the United States, where it has been acquiring stores from local retailers.

Its latest purchase comes as operators of traditional big-box retailers, including Seven & i, have been suffering weak sales as changing tastes and modest wage growth prompt shoppers to defect to cheaper speciality chains and online outlets.

“The U.S. convenience store market has growth momentum. We see opportunities there,” Seven & i President Ryuichi Isaka said.

Seven & i runs general merchandise, department and speciality stores, but the bulk of its operating profit comes from convenience stores.

A man walks out of Seven & i Holdings Co's Seven Eleven store in Tokyo. REUTERS/Kim Kyung-Hoon

The deal would be the biggest by the Japanese company’s U.S. unit 7-Eleven Inc [SILC.UL].

Seven & i has about 19,400 7-Eleven stores in Japan and 8,700 in the United States and Canada, including those run by franchisees.

7-Eleven Inc, known for its “Slurpee” frozen beverage, has said it aims to increase its number of stores to 10,000 over the three years through 2019.</s>Japanese retailer Seven & i Holdings Co <3382.T> said on Thursday it would buy most of Sunoco LP's convenience store and gasoline retail businesses for about $3.3 billion.

Seven & i, which operates the 7-Eleven convenience store chain, said in a statement the deal was aimed at expanding its store network and improving profitability.

Seven & i said it expects to carry out the acquisition from Texas-based Sunoco in August.</s>Seven & i Holdings Co. agreed to pay US$3.3 billion for some Sunoco shops and gasoline retailers in an ambitious push by the 7-Eleven convenience chain owner to expand its U.S. footprint with its largest deal on record.

The purchase by the Japanese retailer’s 7-Eleven Inc. unit will add 1,108 gas stations and convenience stores in Texas and across the eastern U.S., the Japan-based parent said Thursday in a statement. Sunoco’s retail business includes more than 1,300 stores and reported operating income of US$103 million last year on revenue of US$7.7 billion.

Seven & i is building up its chain in the U.S. while President Ryuichi Isaka is paring back some businesses in Japan as part of broad restructuring in which it sold unprofitable department stores and aimed to squeeze more profit from its convenience stores.

“The U.S. is a market of large potential,” Isaka told reporters in Tokyo.

Isaka’s bet on the U.S. is notable as other Japan-based chains including Fast Retailing Co. have struggled to gain traction in the world’s economy, while Japanese carmakers including Toyota are fighting off Trump administration’s criticism that has rekindled trade tensions.

The deal’s enterprise value is about 10 times the Sunoco assets’ earnings before interest, taxes, depreciation and amortization, Isaka said. That’s in line with the 9.7 times median for convenience store deals since 2012, according to data compiled by Bloomberg.

Isaka said the Sunoco deal is “cheap” compared to the company’s previous acquisitions. The company plans to finance as much as US$1.3 billion of the deal through debt, he said. Isaka took the Seven & i helm last year after building up the convenience store business into the retailer’s most profitable unit as its president and COO.

“The cost of the Sunoco acquisition is even higher than those of other acquisitions in recent years and will inevitably impose a financial burden on the Group,” said Ratings & Investment Information Inc. in a note Thursday. The agency also noted that Seven & i has the capacity to improve its finances, and said it’s keeping unchanged the rating for the company.

Seven & i had cash and equivalents of 1.1 trillion yen (US$9.9 billion) as of Nov. 30, according to data compiled by Bloomberg. The company’s capital investment will more than double in current year to 807 billion yen, Isaka said.

As for Sunoco, the gasoline distributor and convenience-store operator reported a US$406 million net loss last year, the biggest deficit since at least 2007. Shares of Sunoco, 44 percent owned by Energy Transfer Partners L.P. which owns and operates energy assets, fell 0.9 percent to US$23.86 in New York trading Wednesday. The stock has dropped 27 percent over the past 12 months, compared with a 14 percent gain in the benchmark S&P Index.

Shares of Seven & i dropped 1.8 percent in Tokyo trading Thursday, bringing the stock’s total loss to 2.6 percent in the past year.

The 7-Eleven unit plans to sign a contract to receive gasoline from Sunoco for the next 15 years, according to the Seven & i statement Thursday.

Seven & I operating profit will probably increase 6 percent from a year earlier to 386.5 billion yen for the 12 months ending February 2018, the company said in a statement Thursday.

The US$3.3 billion deal would be the second-biggest Japanese acquisition of a U.S. company this year, according to data compiled by Bloomberg. Takeda Pharmaceutical Co.’s US$4.66 billion purchase of Ariad Pharmaceuticals Inc. is the largest such transaction.

Japanese firms have announced US$13.1 billion of mergers and acquisitions of U.S. companies so far this year, almost double the US$7.1 billion of deals for the same period in 2016, the data show.</s>Seven & I Holdings Co., the world’s largest convenience store operator, agreed to acquire Sunoco LP retail shops and gasoline businesses for $3.3 billion (about ¥365.9 billion) in a record deal for the Japanese company as it seeks to expand in the U.S.

The deal will add 1,108 gas stations and convenience stores in Texas and the eastern U.S.

Sunoco’s retail unit — which includes more than 1,300 stores — reported 2016 operating income of $103 million on revenue of $7.7 billion.

With the acquisition, “7-Eleven Inc. will expand its store network and offer greater convenience, while also improving profitability,” Seven & I said in a statement Thursday.

The move is Seven & I’s most ambitious with President Ryuichi Isaka at the helm after he prevailed a year ago in a boardroom battle against his predecessor. Under Isaka, the retailer announced a broad restructuring that included divesting struggling department stores and boosting profit at 7-Eleven Inc. by adding stores and selling more private-brand products.

Success with a U.S. expansion is critical for the company as it faces myriad challenges, including restructuring a money-losing supermarket unit and intensifying competition from domestic rivals FamilyMart Co. and Lawson Inc.

Isaka last year laid out plans to increase the number of 7-Eleven outlets in the U.S. to boost its market share.

The firm will also sign a contract to receive gasoline from Sunoco for the next 15 years. The statement said 7-Eleven is aiming to have 10,000 stores by fiscal 2020.

Seven & I forecast operating profit will probably increase 6 percent to ¥386.5 billion for the 12 months ending in February 2018 from a year earlier, according to a statement Thursday.</s>Japanese retailer Seven & i Holdings Co said on Thursday it would buy most of Sunoco LP's convenience store and gasoline retail businesses for about US$3.3 billion. A man walks out of Seven & i Holdings Co's Seven Eleven convenience store in Tokyo, Japan January 12, 2017.

Start the conversation, or Read more at Channelnewsasia.com.</s>Seven & i Holdings on Thursday said it would buy convenience stores and petrol stations from Texas-based Sunoco for about $3.3 billion, as the Japanese retailer accelerates efforts to boost its U.S operation.

Seven & i, which operates the 7-Eleven chain of convenience stores, has been aggressively opening stores in Japan and the United States. In the U.S., it has been acquiring blocks of stores from local retailers.

The conglomerate also runs general merchandising stores, department stores and speciality shops, and has total store sales over 10 trillion yen ($90.52 billion). But it is the convenience store business that earns the bulk of its profit.

For the year ended in February, the company booked 364.6 billion yen in operating profit, of which convenience stores accounted for 86 percent.

In a statement, the firm said U.S. unit 7-Eleven would acquire about 1,100 convenience stores and petrol stations in Texas and other states from Sunoco. It said it expects to carry out the acquisition in August.

Sunoco currently operates about 1,350 retail fuel sites and convenience stores under brands such as APlus and Stripes, the firm's website showed.

The deal would be the biggest by 7-Eleven Inc. Most recently, 7-Eleven Inc acquired 79 stores in California and Wyoming from CST Brands Inc in July last year.

Seven & i has about 19,400 7-Eleven stores in Japan and 8,700 in the United States and Canada, including those run by franchisees. 7-Eleven Inc has said it aims to increase its number of stores to 10,000 over the three years through 2019.</s>Japanese retail-store operator Seven & i Holdings Co. said it would acquire more than 1,000 U.S. convenience stores and gas stations from Sunoco LP for $3.3 billion.

Seven & i 3382, -1.81% SVNDY, +0.54% which owns the 7-Eleven chain, said Thursday it would boost earnings through the acquisition of Sunoco SUN, -0.87% stores in Texas and the eastern U.S.

The purchase of 1,108 gas stations and convenience stores, expected to close in August, is a major step in Seven & i’s plan of establishing 10,000 stores in the U.S. by 2019. Seven & i currently runs 8,563 stores in the U.S., a company spokeswoman said.

An expanded version of this report appears at WSJ.com.

Senate is running out of compromises to avoid ‘nuclear option’ in Gorsuch vote</s>Seven & i Holdings Co on Thursday said it would buy convenience stores and petrol stations from Texas-based Sunoco LP for about $3.3-billion, as the Japanese retailer closes in on its goal to reach 10,000 North American outlets.

The operator of the 7-Eleven chain of convenience stores has been aggressively opening stores in Japan as well as the United States, where it has been acquiring stores from local retailers.

Its latest purchase comes as operators of traditional big-box retailers including Seven & i have been suffering weak sales as changing tastes and modest wage growth have prompted shoppers to defect to cheaper specialty chains and online outlets.

“The U.S. convenience store market has growth momentum. We see opportunities there,” Seven & i President Ryuichi Isaka said at an earnings briefing after announcing the Sunoco deal.

Seven & i runs general merchandise, department and specialty stores, but the bulk of its operating profit comes from convenience stores – or 86 per cent of 364.6 billion yen ($3.29-billion) in the year through February.

In a statement, the firm said U.S. unit 7-Eleven Inc has agreed to buy 1,108 Sunoco convenience stores and petrol stations in Texas and other states in August.

Sunoco currently operates about 1,350 retail fuelling sites and convenience stores under brands such as APlus and Stripes, the firm’s website showed.

The deal would be the biggest by 7-Eleven Inc, known for its “Slurpee” frozen beverage. Most recently, 7-Eleven Inc acquired 79 stores in California and Wyoming from CST Brands Inc in July.

Seven & i has about 19,400 7-Eleven stores in Japan and 8,700 in the United States and Canada, including those run by franchisees. 7-Eleven Inc has said it aims to increase its number of stores to 10,000 over the three years through 2019.

In Japan, same-store sales in the year through February rose 1.8 per cent at the 7-Eleven chain, but fell 4.2 per cent at Seven & i’s Ito-Yokado general merchandise stores.

A Japanese company which is now part of Seven & i opened a 7-Eleven store as a regional licensee in 1974. The then-new retail concept became so successful in Japan that the company later bought out the U.S. owner of the convenience store chain.</s>Sunoco's (SUN ) sales of 7-Eleven stores to Seven & i Holdings (OTCPK:SVNDY) has analysts scrambling to gauge potential winners and losers.

There's the added competitive pressure on convenience store chains run by Kroger (NYSE:KR), Casey's General Stores (CASY ), Alimentation Couche-Tard (OTCPK:ANCUF), Murphy USA (MUSA ) and QuikTrip to consider if 7-Eleven continues to grow in the U.S. On the other side of the equation, RBC Capital thinks Marathon Petroleum (MPC ) could benefit as the Sunoco deal implies a valuation of the Speedway chain of $9.6B to $11.3B. Other chains could fall into the M&A spotlight if C-store chains look to combine.

There could be more action from Seven & i down the road. "The U.S. is a market of large potential," says President Ryuicki Isaka.

Previously: Seven & i to buy Sunoco assets for $3.3B (April 6)</s>May 4 India's Future Retail Ltd said on Monday it had agreed to merge its retail operations with local rival Bharti Retail Ltd to create one of India's biggest retail chain with more than 570 stores across the country.

Under the deal structure, approved by the boards of the two companies, the retail business of Future Retail will be merged with Bharti Retail. The combined entity will own the retail operations of both the companies.

In the second step, infrastructure, investments and assets of both the companies will be combined to create a new entity to be called Future Enterprises Ltd, the companies said in separate statements.

The shareholders of Bharti Retail, a unit of India's Bharti Enterprises which is the parent of leading mobile operator Bharti Airtel Ltd, and Future Retail would own shares in the two new companies.

Future Retail operates around 350 stores in different parts of the country spread over 11 million square feet of retail space. Bharti Retail currently operates a network of over 200 "easyday" stores in multiple formats across 114 cities. (Reporting by Aditi Shah and Devidutta Tripathy; Writing by Sumeet Chatterjee; Editing by Anand Basu)
Seven & I Holdings Co., the parent company of the 7-Eleven convenience store chain, agrees to acquire the retail operations of Sunoco for $3.3 billion.