7-Eleven's parent company 7&I Holdings's $60 billion acquisition plan will include a US asset IPO

The Zhitong Finance App learned that people familiar with the matter said that 7-11's parent company 7&I Holdings has received a 9 trillion yen (60 billion US dollars) acquisition plan proposed by the founder Ito family. The plan will include an initial public offering (IPO) of its North American convenience store and gas station business to mitigate financing issues. The person familiar with the matter said that the Ito family is in a hurry to formally present the acquisition proposal in response to a competitive offer of about 7.1 trillion yen made by Alimentation Couche-Tard Inc. The listing of these businesses is considered the best way to quickly repay the loans that Japan's top three banks will provide in the acquisition.

A person familiar with the matter said that the IPO will raise more than 1 trillion yen in cash to repay Sumitomo Mitsui Financial Group Inc. (Sumitomo Mitsui Financial Group Inc.) Part of the 6 trillion yen loan from Mitsubishi UFJ Financial Group (Mitsubishi UFJ Financial Group Inc.), and Mizuho Financial Group Inc. (Mizuho Financial Group Inc.), and other institutions reassured lenders.

These plans indicate that the Ito family and ITOCHU Corporation are trying to persuade the 7&I Holdings board of directors to recommend their proposed management takeover plan rather than Couche-Tard's proposal. Whatever deal is reached, it will be the largest acquisition in history and reflects the Japanese business community's successful concerted efforts to keep one of Japan's most famous companies out of the hands of foreigners.

Some people familiar with the matter added that 7&I Holdings plans to keep some of its shares after a possible listing. A representative from 7&I Holdings could not immediately comment. The Ito family's office also did not respond.

Coupled with the announced spin-off of 7&I Holdings' domestic supermarket and retail business, the company will actually be split into three entities. The other two will include 7-11 convenience stores in Japan, 7-11 stores in North America, and Speedway and Sunoco gas stations. In the latest fiscal year ending February of this year, these two gas stations had sales of US$70.3 billion.

Canadian Circle K store operator Couche-Tard sought to acquire Speedway in 2020, but 7&I Holdings bid higher at the time, and the latter bought the franchise from Marathon Petroleum Corp. (Marathon Petroleum Corp.) for $21 billion.

ITOCHU Corporation is one of the largest trading companies in Japan and operates a family supermarket that competes with 7-11 supermarkets; any deal may seek synergy between the two convenience store chains.

7&I Holdings has indicated that they may introduce strategic partners and eventually list their domestic retail business. Some people familiar with the matter said these plans are progressing rapidly, adding that the second round of bidding will begin this month. 7&I will seek to retain minority shares similar to the level of ownership it expects in North American assets.

Since Couche-Tard raised the purchase price of 7&I Holdings to $18.19 per share in October, 7&I Holdings has not responded. The Japanese retailer previously rejected Couche-Tard's lower offer and began a restructuring aimed at unlocking value.

Stephen Dacus (Stephen Dacus), head of a special board committee, said the committee is studying the proposals made by the Ito family and Couche-Tard, as well as the company's measures to maximize its own value.

Dacus said in a November 13 statement that the committee will review all proposals and “will continue to engage with all parties in a manner aimed at maximizing value and will continue to act in the best interests of the company's shareholders and other stakeholders.”