By Ritsuko Shimizu and Kane Wu
TOKYO (Reuters) -Japan’s Seven & i Holdings has received a buyout proposal from a member of its founding Ito family, it said on Wednesday following a report that the 7-Eleven owner was considering a management buyout offer worth up to $58 billion.
The offer from Ito-Kogyo, a company linked to Vice President Junro Ito, is non-binding and is now being reviewed by a special committee previously set up by Seven & i, the retailer said in a statement.
No decision has been made regarding the proposal at this time, it added.
Seven & i’s shares were untraded with a glut of buy orders in Tokyo afternoon trade, having been suspended earlier in the day.
The announcement from Seven & i comes after Bloomberg News reported that the company is considering a management buyout to go private in a deal worth up to 9 trillion yen ($58 billion), including some 6 trillion in financing. That would make it one of the largest management buyouts in history.
Seven & i has come under pressure to deliver more for shareholders after Canada’s Alimentation Couche-Tard emerged in August with a takeover bid which sources say it has since sweetened to $47 billion.
Going private would allow the Japanese company to continue under current management and remove pressure from shareholders to sell off more of its assets – as well as eliminate the threat of a takeover by Circle K-owner Couche-Tard.
“My first reaction to the news is that it sounds tentative, but options are being considered on the idea that if push comes to shove, the board would prefer an option which gave more shareholder value,” said analyst Travis Lundy of Quiddity Advisors, who publishes on Smartkarma.
“This could also be a signal flare” to Couche-Tard and investors about the kind of price required for the board to say yes to a Canadian takeover, Lundy added.
The newspaper also said Seven & i was considering a buyout, but put its value at more than 6 trillion yen.
No one was immediately available for comment at Couche-Tard.
BREAK-UP PRESSURE
Whether Couche-Tard manages to make good on its dreams of creating a global convenience store powerhouse or management ultimately pulls off a buyout, any transaction would only underscore the almost unprecedented level of interest in Japan deals from foreign investors.
Japanese banks Sumitomo Mitsui (NYSE:), Mitsubishi UFJ (NYSE:) and Mizuho (NYSE:) were in talks to lend a combined 6 trillion yen, according to Bloomberg News, adding that trading house Itochu could also take part in the acquisition.
Representatives for the three banks and Itochu declined to comment.
Seven & i, which has long been under pressure from some foreign shareholders who want to see a break-up of the company, has been on a push to convince investors that it can deliver long-term growth on its own.
Under a restructuring announced last month, it aims to split off the supermarket operation and some 30 other “non-core” units into a holding company.
While the Japanese 7-Eleven convenience stores are a money-spinner, the company has been hobbled by poor performance at its supermarkets, including Ito Yokado stores which are a major part of the holding company it formed decades ago.
($1 = 154.73 yen)
