Seven & I share the stake after founding a family abandoned $58 billion in acquisition
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Seven&I shares fell on Thursday after the founding family of the Japanese convenience store chain abandoned a $58 billion acquisition.
The company said Thursday that a team led by the ITO family could not obtain financing. Shares fell 10.5% in Tokyo.
The possibility of failure to make an offer increases the likelihood that the diet Kuch-Tard will succeed in bidding for $47 billion. The Canadian competitor is the only known bidder for Seven&I, which owns a 7-Eleven convenience store chain. If Couche-Tard succeeds, it will be the biggest takeover of a Japanese company.
The ITO family launched an effort to buy 7&I and retained it after Couche-Tard’s first uninvited bid for $39 billion.
However, Seven&I said on Thursday, “has received notification from Junro Ito, our Executive Vice President and Representative Director, and ITO Kogyo Co, they will no longer be able to obtain the necessary financing to make a formal proposal to acquire the company.”
The statement comes after rival convenience store chain Itochu, owner of its convenience store chain Familymart, decided not to join the acquisition this week.
Itochu’s share price rose more than 5% after Japanese trading companies confirmed that they would no longer consider the ITO family’s requirements to participate.
A person familiar with the matter said that from a credit rating perspective, the amount of financing required is unacceptable, and for ITOS’s acquisition agreement, the appropriate capital structure of the ITO’s acquisition agreement cannot be agreed to.
The ITO family has been rushing to raise funds for the acquisition and has listened to major Japanese banks, international private equity groups and other global institutions, including Apollo and Thailand’s CP group.
Since Couche-Tard’s approach, Seven&I has set up a special committee to explore other options for its future, including its management’s plans to increase value. The committee is expected to make recommendations ahead of seven annual shareholder meetings in May.
Seven & I said it will “continue to evaluate and consider all strategic options, including Couche-Tard’s proposal to achieve our shareholder value”.
Seven & I rejected Couche-Tard’s initial bid, citing concerns about the U.S. antitrust investigation, if 7-Eleven is combined with Canadian group’s Couche-Tard and Circle K convenience stores.
The Japanese company said it is interacting with Couche-Tard to propose “a viable solution to the important U.S. competition law challenges.”
Couche-Tard did not immediately respond to a request for comment.
