Seven & i Holdings Co. Gains 11% on Report of Potential Private Deal
Shares of Seven & i Holdings Co. surged as much as 11 per cent after Japanese broadcaster NHK reported that the founding family of the retail giant is looking to complete a deal to take the company private by the end of its fiscal year in February.
The Founding Family’s Plan
A special-purpose company established by the founding family and other parties is working on a plan to conduct a takeover bid for the entire firm, and is looking to raise more than ¥8 trillion (US$51.7 billion) from megabanks and U.S. financial institutions, according to the report, citing people familiar with the matter.
Seven & i’s Response
In response to the report, the operator of 7-Eleven stores said nothing has been decided on closing any deal with the founding Ito family. The company’s shares notched their first gains in three days, closing up by 6.52 per cent after rising as much as 11 per cent.
Investor Reaction
While the price is still unknown, investors are taking the news positively as the NHK report made a managed buyout seem a real possibility, said Naoki Fujiwara, a senior fund manager at Shinkin Asset Management Co. ‘Shares are probably rising on expectations that the founding family is serious about this.’
Management Buyout
Seven & i is considering a management buyout to take itself private with funding from banks, Itochu Corp., and the Ito family in a transaction that could be worth around ¥9 trillion, people with knowledge of the matter said last week. Any deal could be presented as an option for shareholders in the event that Alimentation Couche-Tard Inc. becomes more aggressive with its pursuit of Seven & i and makes a tender offer.
Comparison to Alimentation Couche-Tard
The timing of an Ito family bid is ‘much shortened’ compared with Alimentation Couche-Tard’s bid, and the family has no other consolidated business that may threaten anti-consumer behavior, analyst Travis Lundy wrote in a note on Smartkarma.
Impact on Shareholders
A potential deal would likely affect shareholders of Seven & i, who may be given the option to sell their shares at a certain price. This could lead to a change in ownership structure for the company and potentially impact its operations.
Market Reaction
The market has been reacting positively to the news, with shares of Seven & i rising significantly. However, it is essential to note that there are still many uncertainties surrounding the deal, including the price and the terms of the transaction.
Expert Analysis
Naoki Fujiwara, a senior fund manager at Shinkin Asset Management Co., believes that investors are taking the news positively due to the seriousness shown by the founding family. ‘Shares are probably rising on expectations that the founding family is serious about this.’
Investment Implications
The potential deal has significant implications for investors who hold shares of Seven & i. If a management buyout occurs, it could lead to a change in ownership structure and potentially impact the company’s operations.
Comparison to Other Deals
A recent report by Bloomberg highlights that the Ito family is considering a management buyout with funding from banks, Itochu Corp., and the Ito family itself. This deal would be worth around ¥9 trillion, significantly lower than Alimentation Couche-Tard’s bid of ¥15 trillion.
Timeline
The timeline for the potential deal has been shortened compared to Alimentation Couche-Tard’s bid. The Ito family is looking to complete a deal by the end of its fiscal year in February, which could lead to a faster resolution for shareholders and investors.
Conclusion
The news that Seven & i Holdings Co. may be taken private has sent shares soaring as much as 11 per cent. While there are still many uncertainties surrounding the deal, including the price and terms of the transaction, investors seem to be reacting positively due to the seriousness shown by the founding family. A potential management buyout would likely affect shareholders and potentially impact the company’s operations.
Table: Comparison of Deals
| Deal | Price (¥ Trillions) | Timing |
| — | — | — |
| Alimentation Couche-Tard | ¥15 trillion | Ongoing |
| Ito Family Management Buyout | ¥9 trillion | End of Fiscal Year in February |
Note: The table above provides a comparison between the potential deals and their respective prices and timings.
