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Seven & i shares plunged on Thursday after the Japanese convenience store chain’s founding family abandoned an attempted $58bn buyout.
A group led by the Ito family was unable to secure financing, the company said on Thursday. Shares fell 10.5 per cent in Tokyo.
The failure to muster an offer raises the likelihood that Alimentation Couche-Tard will succeed with its unsolicited $47bn bid. The Canadian rival is the only known bidder for Seven & i, which owns the 7-Eleven convenience store chain. If Couche-Tard succeeds, it would be the biggest takeover of a Japanese company.
The Ito family launched its effort to buy Seven & i and keep it under Japanese ownership in November, months after Couche-Tard made its first unsolicited bid of $39bn.
However, Seven & i said on Thursday it had “received notification from Junro Ito, our executive vice-president and representative director, and Ito Kogyo Co that they are no longer able to secure the necessary financing to make a formal proposal to acquire the company”.
The statement came after Itochu, owner of rival convenience store chain FamilyMart, decided this week it would not join a buyout.
Itochu’s shares rose more than 5 per cent on Thursday after the Japanese trading house confirmed it was no longer considering a request from the Ito family to take part.
The amount of financing needed was unacceptable from a credit rating perspective, and an appropriate capital structure for the Itos’ buyout deal could not be agreed, said a person familiar with the matter.
The Ito family had been rushing to raise financing for the buyout and sounded out big Japanese banks, international private equity groups and other global institutions, including Apollo and Thailand’s CP Group.
Since Couche-Tard’s approach, Seven & i has set up a special committee to explore other options for its future, including a plan by its management to raise its value. The committee is expected to give recommendations ahead of Seven & i’s annual shareholders meeting in May.
Seven & i said it would “continue to evaluate and consider all strategic options, including the proposal from Alimentation Couche-Tard, to realise value for our shareholders”.
Seven & i’s rejection of Couche-Tard’s initial bid cited concerns about a US antitrust probe if 7-Eleven were combined with the Canadian group’s Couche-Tard and Circle K convenience stores.
The Japanese company said it was engaging with Couche-Tard to come up with a “viable solution that addresses the significant US competition law challenges”.
Couche-Tard did not immediately respond to a request for comment.
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