Bidding War Erupts for Seven & i Holdings’ Non-Core Assets
Private Equity Firms Go Head-to-Head
In a surprise move, three private equity firms have submitted bids exceeding $5 billion for the non-core assets of Japan’s Seven & i Holdings. KKR, Bain Capital, and Japan Industrial Partners have all made it to the next round of bidding, with offers ranging from $5.1 billion to $7.6 billion.
A Hefty Price Tag
The bids far surpass the expected enterprise value of 500 billion yen, a measure that includes debt. Seven & i Holdings, the owner of 7-Eleven, is looking to spin off its non-core businesses, including its supermarket operations, into a new entity called York Holdings.
What’s at Stake
York Holdings will house 31 subsidiaries, including the group’s superstores business, baby goods store Akachan Honpo, and the company that operates Denny’s restaurants in Japan. The sale of these assets is a crucial step in Seven & i’s efforts to refocus on its core convenience store business.
A Family Affair
Meanwhile, the founding family of Seven & i is in talks to take the company private in a management buyout. This move is designed to fend off a $47 billion takeover offer from Canada’s Alimentation Couche-Tard.
The Next Steps
The three private equity firms will now submit legally binding proposals, which may be altered following due diligence. Unsuccessful bidders from the first round may still enter negotiations if the three firms fail to reach an agreement with Seven & i. The retailer aims to select the winning bid as early as February, with the decision finalized by the spring.
Mezzanine Funding in the Mix
Interestingly, the founding family has also approached Bain and KKR about mezzanine funding for the management buyout. If successful, the privatization would be the largest ever of a Japanese firm, with Seven & i’s market capitalization standing at 6.2 trillion yen as of December 24.
Leave a Reply