A consortium proposing to take Seven & i Holdings Co. private has enlisted Citigroup Inc. and Bank of America Corp. for financing, adding to the growing number of participants in the management buyout (MBO) effort. Sources familiar with the deal indicated that the two U.S. banks’ roles would focus on refinancing the debt of Seven & I’s U.S. operations, which contribute significantly to the company’s debt load. As of November, Seven & I reported a total debt of ¥2.7 trillion ($17.8 billion), with 56% attributed to its overseas convenience store operations. In typical buyout scenarios, banks often pass on such debt to external investors.
Thai conglomerate CP All Plc, which holds the Thai franchise for 7-Eleven, is also exploring the possibility of taking an equity stake in the buyout, valued at approximately ¥500 billion. CP All’s involvement could lead to higher interest expenses, potentially dampening the company’s profit growth, as highlighted by Asia Plus Securities Pcl in a recent note.
The consortium’s bid is part of a strategy devised to counter the public overtures made by Canadian retailer Alimentation Couche-Tard Inc. in August, which sought to acquire Seven & i. The buyout effort is being led by Seven & i’s founding Ito family in collaboration with Itochu Corp., operator of Familymart. Originally, the bid was valued at ¥9 trillion, surpassing Couche-Tard’s ¥7.5 trillion offer, but the current market capitalisation of Seven & i, which stood at ¥6.2 trillion on Thursday, suggests that the final bid may be lower.
The MBO proposal involves a ¥4 trillion equity stake, with the Ito family contributing around ¥500 billion and Itochu offering more than ¥1 trillion. Additional financing is expected from several banks, including Sumitomo Mitsui Financial Group Inc., Mitsubishi UFJ Financial Group Inc., and Mizuho Financial Group Inc. Notably, private equity firms Apollo Global Management Inc. and KKR & Co. are also reportedly considering participating in the buyout.
A successful bid would enable Seven & i, one of Japan’s largest retailers, to restructure privately, ensuring that the storied brand remains in domestic hands, while also marking a significant group effort from corporate Japan to fend off foreign takeover attempts.
