Seven & i receives buyout proposal from founding Ito family
Japan’s Seven & i Holdings announced on Wednesday that it has received a buyout proposal from a member of the founding Ito family, following reports that the owner of 7-Eleven is contemplating a management buyout offer valued at up to $58 billion. The proposal from Ito-Kogyo, associated with Vice President Junro Ito, is non-binding and is currently under review by a special committee that Seven & i had previously established. The company stated that no decision has been made regarding the proposal at this time.
In Tokyo afternoon trading, Seven & i’s shares were untraded due to a surge in buy orders after being suspended earlier in the day. This announcement follows a report by Bloomberg News indicating that Seven & i is exploring a management buyout to go private in a deal potentially worth up to ¥9 trillion ($58 billion), which includes approximately ¥6 trillion in financing, making it one of the largest management buyouts ever.
Seven & i has faced increasing pressure to enhance shareholder value after Canada’s Alimentation Couche-Tard emerged with a takeover bid in August, which sources say has since been improved to $47 billion. Going private could enable the Japanese company to operate under its current management, alleviating pressure from shareholders to divest more of its assets while also mitigating the risk of a takeover by Circle K-owner Couche-Tard.
Regardless of whether Couche-Tard succeeds in its plans for a global convenience store entity or if management successfully executes a buyout, any transaction would highlight the exceptional interest in Japanese deals from foreign investors. Japanese banks Sumitomo Mitsui, Mitsubishi UFJ, and Mizuho have reportedly been in discussions to provide a combined ¥6 trillion in financing, and trading house Itochu may also participate in the acquisition. Representatives from these banks and Itochu have chosen not to comment.
Under mounting pressure from certain foreign shareholders advocating for a breakup of the company, Seven & i has been making efforts to demonstrate its potential for long-term growth. As part of a restructuring plan announced last month, the company aims to create a holding company by separating its supermarket operations and approximately 30 other “non-core” units. Despite the profitability of its Japanese 7-Eleven convenience stores, the company has struggled with the poor performance of its supermarket division, including Ito Yokado stores, which are a significant component of the holding company established decades ago.