Japanese convenience store giant Seven & i plans to buy back its own shares and leave the stock market, aiming to escape a takeover by its Quebec rival Couche-Tard, according to press reports and a company statement published Wednesday.
• Also read: Couche-Tard defends in Tokyo its offer to buy “all” of Seven & i
• Also read: Seven & i is restructuring in the face of the desires of Quebec's Couche-Tard
• Also read: Seven & i confirms a new takeover offer by Couche-Tard
Seven & i Holdings, owner of the 7-Eleven convenience stores, rejected at the beginning of September a first takeover proposal by Alimentation Couche-Tard (ACT), which it considered undervalued. But the Canadian distribution heavyweight then presented an improved offer which valued the Japanese group at $47 billion, enough to attract certain shareholders.
To escape greed, Seven & i “ therefore intends to become an unlisted company ”, explained the financial daily Nikkei, citing sources close to the company.
The stakes are high: with 85,000 stores in around twenty countries, 7-Eleven is the largest chain of convenience stores in the world.
If the Japanese company buys back all the available securities, “it anticipates that the total amount will be of a similar scale to what ACT projected,” specifies the economic daily, according to which it would be the largest operation of this type ever carried out in the Japan.
According to the Bloomberg agency, which also reports the information, Seven & i could however spend up to 9,000 billion yen ($58 billion) in the operation, much more than its current market capitalization (6,500 billion yen on Wednesday ).
According to the financial agency, the Ito family (that of the founder of the group) and the investment company Itochu could join forces to finance the buyback of the shares, as well as three major Japanese banks (Sumitomo Mitsui, MUFJ, Mizuho) .
Without confirming this information, Seven & i indicated on Wednesday that it had received an “acquisition proposal”, not legally binding, from Ito-Kogyo, the Ito family firm which already owns 8% of the shares.
A special committee is “examining this proposal carefully and in depth with its financial and legal advisors,” the Japanese distribution giant said in a press release.
“No decision has been made as to whether to pursue a transaction with (…) Ito-Kogyo, Alimentation Couche-Tard or any other party, there is no guarantee that such a transaction will be concluded” , however, insists the group.
Soaring on the stock market
Before a delisting materializes, “many obstacles will need to be overcome, including whether other investors, including the founding family, will participate and whether financial institutions will agree to grant the massive loans that this will require,” warns the Nikkei. The project “is at a preliminary stage,” he notes.
In the immediate future, the simple prospect of a future share buyback at a price much higher than the current price caused euphoria among investors: Seven & i shares soared by almost 17% on the Tokyo Stock Exchange. after a brief suspension of trading, and closed up 11.78% at 2,490 yen.
Under pressure to boost its profitability after rejecting Couche-Tard's offer, Seven & i assured its shareholders in October that it could almost double its turnover by 2030, thanks to international expansion and ambitious restructuring in order to concentrate on its 7-Eleven convenience stores, the heart of its activity.
A quarter of 7-Eleven stores are in Japan, where these omnipresent convenience stores sell take-out meals as well as concert tickets and offer services (ATMs, bill payment, photocopiers, etc.).
