Reports from Japanese media suggest that the founding Ito family of Seven & i Holdings Co., the parent company of the 7-11 convenience store chain, is seeking to privatize the company by the end of the fiscal year in February. This news led to an unusual stock price surge of over 11% in the Japanese market. A special purpose company formed by the founding family and others is reportedly planning to acquire the entire company, aiming to raise over 8 trillion yen (approximately $517 billion) from major Japanese banks and U.S. financial institutions. Currently, Seven & i Holdings has a market value of around $44 billion.
Naoki Fujiwara, a senior fund manager at Shinkin Asset Management, noted that while the privatization price is not yet determined, investors are optimistic about the possibility of management-led buyout becoming a reality. The founding family's serious approach to this matter is expected to further boost the stock price.
Insiders revealed that Seven & i is contemplating a management buyout with potential funding from banks, Itochu Corporation, and the Ito family. The transaction could be valued at approximately 9 trillion yen, significantly higher than the current market value of around 6.85 trillion yen.
There is also a possibility that Alimentation Couche-Tard, the parent company of Circle K, might present a more aggressive acquisition offer that satisfies major shareholders and investors, influencing the potential buyout scenario.
Analyst Travis Lundy from Smartkarma mentioned that the privatization led by the Ito family could shorten the acquisition process compared to a bid from Alimentation Couche-Tard. The family's involvement would avoid antitrust issues and cultural integration challenges that a foreign acquisition might face.
7-11, as the world's largest convenience store chain and the core asset of Seven & i, has a significant presence in over 20 countries with more than 85,000 stores. It is the primary profit source for Seven & i Holdings, making it a highly valuable asset. Investors believe that 7-11 could have a higher market valuation if operated as an independent company.
