Takeover target
Another hat may soon be thrown in the Slurpee chiller. The Ito family of Japan, the founders of the 7-Eleven chain in the country, is set to propose a ¥9T ($60B) management buyout of Seven & i Holdings (OTCPK:SVNDF), according to sources at Bloomberg. The bid would go up against a ¥7.1T ($47B) offer by Canada’s Alimentation Couche-Tard (OTCPK:ANCTF), a multinational convenience store operator that owns rival Circle K in the U.S.
Backdrop: Long under pressure from activist shareholders, Seven & i quickly rejected an initial bid from Couche-Tard in September, saying it undervalued its business and didn’t take regulatory concerns into account. A higher offer was eventually made, but fresh efforts are in the works to keep the brand from falling into hands overseas. A bid by the founding Ito family would stave off the largest takeover in Japan and result in Seven & i splitting into three distinct entities.
The first would raise more than ¥1T in cash ($6.6B) via the IPO of North American 7-Eleven stores (as well as its Speedway and Sunoco gas station subsidiaries). Those establishments generated $70.3B in revenue during the most recent fiscal year, showing the power and reach of the business. Another planned unit would include 7-Eleven convenience stores in Japan, while the last division was already announced in October and would be created by spinning off Seven & i’s non-core Japanese businesses like supermarkets, specialty stores, and retail outlets. Undervalued With Good Overseas Growth Potential?
7-Eleven history: Starting out in 1927 as a convenience store attached to Southland Ice Company shops (this was before mainstream refrigeration), the locations eventually gained in popularity by staying open on weekends and for notable branding efforts that made them known as Tote’m Stores. The name was changed to 7-Eleven in 1946 to reflect expanded business hours, while U.S. franchising began in 1961, and in 1973, Ito-Yokado signed an agreement to develop 7-Eleven convenience stores in Japan. In 1991, Ito-Yokado acquired a 70% stake in Southland Corporation, which the conglomerate later expanded to 100% in 2005, when its collective businesses were reorganized into the holding company known as Seven & i Holdings.
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