(Bloomberg) — Seven & i Holdings Co. is considering a management buyout to take itself private with funding from banks, Itochu Corp. and the founding Ito family in a transaction that could be worth around ¥9 trillion ($58 billion), people with knowledge of the matter said.
Most Read from Bloomberg
The deal could be presented as an option for shareholders in the event that Alimentation Couche-Tard Inc. becomes more aggressive with its pursuit of Seven & i and makes a tender offer, the people said, asking not to be identified because the negotiations haven’t been made public.
The operator of 7-Eleven stores hasn’t said anything publicly since Couche-Tard increased its proposed price for Seven & i to $18.19 a share last month to value the Japanese retailer at ¥7.2 trillion. Seven & i had rebuffed an earlier, lower offer by the Canadian operator of Circle K stores and embarked on a restructuring aimed at unlocking value. A deal with Couche-Tard would be the biggest-ever foreign takeover of a Japanese company.
Under the management buyout being discussed, which would also be the largest-ever in Japan, trading house Itochu, the founding family and existing investors would contribute ¥3 trillion in cash and equity, the people said. Japan’s top megabanks — Sumitomo Mitsui Financial Group Inc., Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. — would put up ¥6 trillion in financing, they said.
Talks are ongoing and the deal could be difficult given its size, the people said. There’s a chance that the management buyout may not proceed if Couche-Tard rescinds its proposal to buy Seven & i, they said.
A representative for Seven & i wasn’t immediately available to comment. Representatives for Sumitomo Mitsui, Mitsubishi and Mizuho declined to comment on any specific transactions. A spokesperson for Itochu declined to comment, saying nothing has been decided.
Seven & i shares were suspended following the news of the potential deal. Itochu shares fell as much as 3.4% in early afternoon trading in Tokyo.
A management buyout would be a remarkable unified response to Couche-Tard’s takeover approach, which itself is the biggest ever foreign attempt to buy a Japanese target. With the participation of Seven & I’s biggest competitor in the domestic convenience store business — Itochu — it would reflect the coordinated resistance of corporate Japan to foreign control of one of its most famous companies.