The owner of 7-Eleven convenience stores, Seven & i Holdings Co., is considering a management buyout to take itself private with funding from banks, Itochu Corp. and the founding Ito family in a transaction that could be worth ¥9 trillion ($58 billion), people with knowledge of the matter said.
The deal could be presented as an option for shareholders in the event that Alimentation Couche-Tard Inc. becomes more aggressive with its pursuit of Seven & i and makes a tender offer, the people said, asking not to be identified because the negotiations haven’t been made public.
7-Eleven convenience stores were founded in Dallas in 1927 and the company’s U.S. headquarters are still in Irving, even though the company’s owners are in Japan.
The operator of 7-Eleven stores hasn’t said anything publicly since Couche-Tard increased its proposed price for Seven & i to $18.19 a share last month last month to value the Japanese retailer at ¥7.2 trillion.
Seven & i had rebuffed an earlier, lower offer by the Canadian operator of Circle K stores and embarked on a restructuring aimed at unlocking value. A deal with Couche-Tard would be the biggest-ever foreign takeover of a Japanese company.
Under the management buyout being discussed, which would also be the largest-ever in Japan, trading house Itochu, the founding family and existing investors would contribute ¥3 trillion in cash and equity, the people said. Japan’s top magabanks — Sumitomo Mitsui Financial Group Inc., Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. — would put up ¥6 trillion in financing, they said.
A representative for Seven & i wasn’t immediately available to comment. Representatives for Sumitomo Mitsui, Mitsubishi and Mizuho weren’t immediately available to comment.
Itochu runs FamilyMart, a rival to 7-Eleven stores, and any deal may seek to deliver synergies between the two convenience-store chains.
Although Seven & i laid out plans that will effectively split the company, the management buyout would initially seek to acquire the entire business, one of the people said. Following a deal, the new owners would eventually implement the plan to separate the business focused on 7-Eleven, convenience stores and gasoline stations from the other, which is made up of less profitable retail operations, the person said.
– Taro Fuse and Hideki Suzuki for Bloomberg
