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In a recent turn of events, shares of Seven & i saw a sharp decline on Thursday after the founding family of the famous Japanese convenience store giant dropped its ambitious $58 billion buyout plan. According to the company, the Ito family-led group couldn’t pull together the necessary funding. This caused shares to tumble by 10.5% in Tokyo.
With this bid falling apart, chances are now higher that Alimentation Couche-Tard might prevail with its unsolicited $47 billion offer. The Canadian company stands as the sole active bidder for Seven & i, the owner of the popular 7-Eleven chain. Should Couche-Tard succeed, it would mark the largest acquisition of a Japanese firm to date.
The Ito family had attempted to secure ownership of Seven & i domestically since November, shortly after Couche-Tard made its first uninvited $39 billion proposal. However, on Thursday, Seven & i announced that they received a notification from Junro Ito, an executive VP and representative director, and Ito Kogyo Co stating their inability to gather the required financing for a formal takeover bid.
This revelation followed Itochu’s recent decision to withdraw from the buyout talks. The company, which owns FamilyMart, another competing convenience store chain, saw its shares jump over 5% after announcing it won’t entertain further involvement with the Ito family’s attempt.
A source close to the matter mentioned that the financial demands were too hefty from a credit rating standpoint, and finding an agreeable capital structure for the buyout was unsuccessful.
Desperate to secure funds, the Ito family reached out to major Japanese banks, international private equity firms, and global entities including Apollo and Thailand’s CP Group.
Ever since the Couche-Tard bid, Seven & i formed a special committee to explore various paths for the company’s future, one being a plan from its management aimed at boosting its value. The committee is expected to present their recommendations before the company’s annual shareholder meeting in May.
Seven & i stated they’d remain open-minded and continue exploring all strategies, including Couche-Tard’s proposal, to maximize shareholder value.
Initially, the company turned down Couche-Tard’s offer due to worries about a US antitrust investigation that a merger with the Canadian company’s operations, including Couche-Tard and Circle K stores, might provoke.
Seven & i is presently in discussions with Couche-Tard to devise a “viable solution” that tackles these major US competition law issues. Couche-Tard has yet to comment on these developments.
