Future of 7-Eleven Could Include an IPO
IRVING, Texas — Big changes could be coming to 7-Eleven Inc.
Reports indicate the $58 billion management buyout offer of Seven & i Holdings Co. Ltd. currently on the table would include plans for an initial public offering (IPO) of the North American convenience store business, according to BNN Bloomberg.
Citing people with knowledge of the matter, the news outlet reported the IPO is being considered as the optimal way to quickly pay down loans that would be extended by three of Japan's biggest banks in the buyout.
Irving-based 7-Eleven operates, franchises and/or licenses more than 13,000 stores in the United States and Canada. In addition to 7-Eleven stores, it operates and franchises Speedway, Stripes, Laredo Taco Co., and Raise the Roost Chicken and Biscuits locations.
Junro Ito, son of Seven & i founder Masatoshi Ito and current vice president and representative director, and his private company Ito-Kogyo Co. Ltd., made the buyout proposal in late November. Ito-Kogyo currently holds a stake of approximately 8% in Seven & i, as Convenience Store News previously reported.
The news of a possible IPO comes as the Tokyo-based parent company of 7-Eleven tries to fend off an acquisition bid by Alimentation Couche-Tard Inc. Couche-Tard initially submitted a friendly, nonbinding proposal to Seven & i this summer. Seven & i subsequently rejected the $39 billion bid, responding that the offer failed to meet the company's standalone value or its opportunity to generate greater value in the near future.
Within a month, Couche-Tard upped its offer by 22% to roughly $47 billion — a bid it continues to stand by.
Laval, Quebec-based Couche-Tard is the parent company of the Circle K brand. Any acquisition would unite two of the largest convenience retailers in the world.
A 7-Eleven IPO would raise more than $6.65 billion in cash to help pay down the nearly $60 billion in loans by Sumitomo Mitsui Financial Group Inc., Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. and any other institutions, one person told the news outlet.
According to BNN Bloomberg, plans show that the Ito family and Itochu Corp. want to convince Seven & i's board to recommend their management buyout over Couche-Tard's proposal.
Seven & i intends to retain a stake in the business after any potential listing, some of the people added.
A representative for Seven & i wasn't immediately able to comment. Similarly the news outlet's attempts to contact the Ito family office didn't elicit a response.