DALLAS -- A committee assembled by 7-Eleven Inc., Dallas, to discuss a buyout offer by its Tokyo-based parent company, Seven-Eleven Japan, is asking shareholders to sit tight until the committee can further study the offer and its likely results.
The special committee is unable to take a position with respect to the tender offer at the present time as it has not yet completed a full and deliberate review and evaluation of the material terms and provisions of the tender offer with the special committee's legal and financial advisors, the committee stated [image-nocss] in a filing with the Securities & Exchange Commission (SEC).
The committee expects to complete its review and evaluation of the offer in the near future and inform 7-Eleven's shareholders as to whether it recommends acceptance or rejection of the tender offer. At that time, the committee will include the reasons for the position taken with respect to the tender offer or its inability to take a position.
In the meantime, the special committee requests that the shareholders of [7-Eleven] not tender their shares with respect to the offer at the current time, and defer making a decision until the special committee has advised shareholders of its position or recommendation, if any, with respect to the tender offer, the SEC filing states.
Seven-Eleven Japan Co. has issued a $1.2-billion cash-tender offer to purchase the 27.3% share of the U.S. company the Tokyo-based retailer doesn't already own.
Seven-Eleven Japan, which is Japan's largest convenience store operator with more than 10,000 locations, is 51% owned by Japanese retailer and Denny's franchisee Ito-Yokado. The company, which already holds 72.7% of the U.S. 7-Eleven, has offered $32.50 a share in cash for the remaining shares. There are about 32 million shares of 7-Eleven Inc. stock.
Seven-Eleven Japan said that in order to better compete in the market, 7-Eleven must boost investment in its merchandising, store renovation, distribution and logistics systems, and information systems. The increase in investment, however, is likely to result in lower growth and profitability for 7-Eleven in the short term, the company said. Seven-Eleven Japan also said it expects that taking 7-Eleven private will help achieve a better-governed group structure.
The tender offer will be conditioned upon, among other things, the sale of a majority of the shares not held by Seven-Eleven Japan and its affiliates, and the ownership by Seven-Eleven Japan of at least 90% of the shares on a fully diluted basis. The tender offer is not conditioned upon Seven-Eleven Japan obtaining any financing.
Meanwhile, since the tender offer was received on Sept. 1, at least five lawsuits have been filed against 7-Eleven Co., Seven-Eleven Japan and/or the members of their boards of directors, according to the SEC filing. The lawsuits generally allege, among other things, that the defendants have breached fiduciary duties owed to the company's shareholders other that [Seven-Eleven Japan],that the offer price is inadequate and that a majority of the defendants have conflicts of interest with respect to the offer.
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