Seven & i Holdings Considers $58 Billion Management Buyout Amid Takeover Threat

Seven & i Holdings considers a $58B management buyout to fend off Couche-Tard's foreign takeover bid, marking Japan's largest buyout proposal.

Seven & i Holdings Considers $58 Billion Management Buyout Amid Takeover Threat
Seven & i considers $58 billion buyout in response to foreign takeover bid.

Seven & i Holdings Co., the operator of 7-Eleven, is exploring a management buyout to take itself private, a move that could result in a massive ¥9 trillion ($58 billion) deal. This potential buyout would involve funding from major banks, trading company Itochu Corp., and the founding Ito family, according to sources familiar with the matter.

The buyout proposal, which is still in its early stages, comes as a response to the growing pressure from Canadian retailer Alimentation Couche-Tard Inc. The company, which owns the Circle K brand, recently increased its offer for Seven & i to ¥7.2 trillion ($18.19 per share). With Couche-Tard’s bid making waves as one of the largest foreign acquisition attempts of a Japanese company, Seven & i is considering alternatives to protect its independence.

If the buyout goes through, it would be the largest-ever private acquisition in Japan, surpassing any previous deals in the country’s corporate history. Under the current plan, Itochu, the Ito family, and other investors would provide ¥3 trillion in cash and equity, while Japan's three megabanks — Sumitomo Mitsui, Mitsubishi UFJ, and Mizuho — would provide ¥6 trillion in financing.

The proposed buyout is seen as a unified response from Japan’s corporate elite, demonstrating resistance to foreign control of one of the nation’s most iconic companies. With Itochu, a competitor in the convenience store sector, actively involved in the deal, the buyout highlights the significance of Seven & i within Japan's economy.

Despite the ambitious scale of the deal, talks are ongoing, and the management buyout may not materialize if Couche-Tard withdraws its offer or if the negotiations fail to progress. As of now, Seven & i has not publicly commented on the specifics of the deal.

This news caused a dramatic shift in Seven & i's stock price, with shares surging by 17% on the day, marking the company’s largest intraday gain since August. Meanwhile, Itochu’s stock dropped by 3.4%, reflecting the complexities and potential risks of this large-scale transaction.