SEJ Ups Offer

7-Eleven Inc. recommends stock deal to take company private

TOKYO -- Seven-Eleven Japan Co. Ltd. (SEJ) said Friday that it would amend its tender offer for all 7-Eleven Inc. common stock not already owned by SEJ and its subsidiaries by increasing the offer price to $37.50 per share (about $1.4 billion) from $32.50 (about $1.2 billion).

The special committee of the board of directors of 7-Eleven Inc. has determined that it will recommend that shareholders tender their shares in connection with the amended offer. The committee had rejected the earlier offer as inadequate, andnot in the best interests of the shareholders. [image-nocss] The revised offer price represents a premium of approximately 32% over the closing price of 7-Eleven Inc. stock on Aug. 31, 2005, the last trading day prior to the announcement of the tender offer, and an increase of approximately 15% over the original offer price.

As reported in CSP Daily News, SEJ extended its offer until 12:00 a.m. EST on Tuesday, Nov. 8, 2005. As of Oct. 20, 2005, approximately 203,245 shares have been tendered and not withdrawn in connection with the offer. 7-Eleven Inc. shareholders who have already tendered their shares will receive the increased offer price of $37.50 per share and need not take any additional action in order to receive such price.

Also, SEJ has reached an agreement in principle, subject to court approval, to settle certain class-action lawsuits that have been filed on behalf of 7-Eleven Inc.'s shareholders.

SEJ owns about 73% of the U.S. company's stock. It announced on September 6 that it was making a tender offer for the remaining shares. At the time, Mitchell Corwin, an analyst at Morningstar, Chicago, told Reuters, "There's a good possibility that [SEJ will] come in with a higher offer. There's some shareholders that may not want to get taken out at this current price and perhaps there's some shareholders that may think that they can realize a higher stock price if the stock keeps going up at its current rate.

Japan's largest convenience store operator, with more than 10,000 locations, SEJ is 51% owned by Japanese retailer and Denny's franchisee Ito-Yokado.

SEJ has 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 would help achieve a better-governed group structure.

At a breakfast event hosted by the Central Dallas Association on Friday, Jim Keyes, president and CEO of 7-Eleven Inc., told attendees the buyout would not affect the company's headquarters relocation plans. "We are still moving downtown, and we will continue to be a Dallas-based company," he said, according to a report by the Dallas Business Journal.

Earlier this year, 7-Eleven signed a 15-year lease to become the lead tenant in One Arts Plaza, a new mixed-use project being developed by Billingsley Co. in the Arts District of downtown Dallas. The project is scheduled for completion in March 2007.

Keyes, slated to talk to the CDA about why 7-Eleven chose downtown Dallas, came in to wrap up a presentation begun by Jack Wilke, vice president of communications, the report said. "There are still things that need to happen to finalize the deal, but in principal we have reached an agreement to become a privately held company, based in Dallas," Wilke said. "As a result, Jim Keyes needed to meet with the management team and start a whole series of communications with the investment community, employees and franchisees around the world."