Mergers & Acquisitions

Apollo Weighs $9.5 Billion Stake in Seven & i Management Buyout

Partners negotiating investment in effort to fend off Couche-Tard takeover attempt
apollo global management
Logo/Apollo Global Management

A U.S. asset management firm is contemplating joining a management buyout of Seven & i Holdings Co. Ltd. by the Japanese company’s founding family as the global convenience-store retailer attempts to fend off an acquisition attempt by Canadian rival Alimentation Couche-Tard Inc.

Apollo Global Management Inc. is considering taking a substantial stake in a bid by Tokyo-based Seven & i’s founding Ito family to take the company private, people familiar with the matter told Bloomberg News. Apollo is discussing a commitment of as much as $9.5 billion for an equity stake in the plan, said the people, who asked not to be identified as the information isn’t public.

Under the current proposal, which is subject to change, New York-based Apollo would join the Ito family and Itochu Corp., the operator of the FamilyMart c-store chain in Japan, as key investors. The Ito family is weighing a commitment of around $3.17 billion and Itochu more than $6.34 billion. Other partners are still negotiating stakes, said the report.

The present proposal sees equity stakes making up about $25.34 billion combined, although that doesn’t necessarily mean Apollo will secure majority control because the terms are still being negotiated, the report said. The rest of the financing is coming from Japan’s top banks, the people said. Sumitomo Mitsui Financial Group Inc., Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. are set to participate in the deal, said the report.

The valuation of the buyout effort was originally planned for $57.1 billion, topping the $47.6 billion takeover bid from Laval, Quebec-based Couche-Tard, but may be lowered as the Japanese company’s market value remains well below the proposals, the people said. Seven & i’s market valuation on Friday hovered around $39.9 billion after stocks dipped over third-quarter earnings.

A representative for Apollo declined to comment to Bloomberg.

“The current [management buyout] proposal is already high, so the fact that they’ve found another source of funding is a big positive for shareholders,” Shun Tanaka, a senior analyst at SBI Securities Co., told the news agency, adding that it raises the possibility of a different buyout or higher offer by others. “Investors’ expectations will be heightened by this,” he said.

The speculation began in August, when Couche-Tard submitted a proposal, $14.86 per share or approximately $39 billion, to acquire Seven & i, which has rejected the proposal twice, saying it “undervalues” the company. Couche-Tard in October then raised its offer to $18.19 per share or approximately $47.2 billion.

The board of Seven & i formed a special committee of independent outside directors to review all offers.

Seven & i’s chief financial officer, Yoshimichi Maruyama, said last week that the special committee is still considering Couche-Tard’s acquisition proposal and the management buyout proposal from Seven & i’s founding Ito family; however, the committee does not have enough information yet to make a decision. The special committee may make a decision as early as May, Maruyama said. “As one scenario, we are working toward the general shareholders meeting in May while thinking about what is the best way,”

  • 7-Eleven is No. 1 on CSP’s 2024 Top 202 ranking of U.S. c-store chains by store count. Alimentation Couche-Tard is No. 2.

Seven & i operates convenience stores, superstores, supermarkets, specialty stores, foodservices, financial services and IT services. Irving, Texas-based 7-Eleven Inc. operates, franchises or licenses more than 83,000 convenience stores in 19 countries and regions, including more than 13,000 7-Eleven convenience stores in the United States and Canada.

Couche-Tard operates in 31 countries and territories, with more than 16,700 stores. Its network includes more than 7,100 stores in the United States, primarily under the Circle K banner.

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