Apollo Global Management Inc. (NYSE:APO) is weighing a ¥1.5 trillion ($9.5 billion) equity stake in a management buyout of Seven & i Holdings Co. Ltd. (OTC:SVNDY).
What Happened: The deal would see Apollo collaborating with the founding Ito family and Itochu Corp. to strengthen domestic control of Seven & i, a global retail conglomerate known for operating 7-Eleven convenience stores, supermarkets, department stores, food services, financial services, and e-commerce platforms, Bloomberg reported, citing people familiar with the matter.
It will be part of a bigger buyout attempt first estimated to cost 9 trillion Japanese Yen ($60.3 billion). The investment trumps the 7.5 trillion Japanese Yen ($50.25 billion) takeover bid by Alimentation Couche-Tard Inc. (OTC:ANCTF).
Ito family and Itochu are considering pledging 500 billion Japanese Yen ($3.35 billion) and 1 trillion Japanese Yen ($6.7 billion) respectively, and major Japanese banks are providing supplemental funding.
Seven & i shares rose 7.4% on the news, but its market value of 6.3 trillion Japanese Yen ($42.21 billion) is still below both proposed valuations. The company's CFO Yoshimichi Maruyama confirmed Thursday that a special board committee is considering both the Couche-Tard and Ito family proposals.
The deal is a significant change in Japan's corporate landscape, as domestic interests rally to retain control of the 7-Eleven operator. The company was recently added to Japan's Foreign Exchange and Foreign Trade Act watchlist, though Finance Minister Shunichi Suzuki indicated this wouldn't necessarily impede foreign investment.
Seven & i Holdings is undergoing strategic restructuring and expansion while facing investor pressure from takeover bids, including a counterproposal from a member of its founding family.
Apollo did not immediately respond to Benzinga's request for comment.
Why It Matters: "The current MBO proposal is already high, so the fact that they've found another source of funding is a big positive for shareholders," said Shun Tanaka, senior analyst at SBI Securities Co., suggesting it could spark higher competing offers.
Details of the investment structure are still under negotiation, but the consortium hopes to complete its proposal before Seven & i's May shareholders' meeting. The company is also simultaneously pushing for a restructuring plan that would separate its convenience store operations from other retail businesses.
Price Action: Seven & I Holdings is currently trading at 2,509 Japanese Yen ($15.84) on Friday, gaining 5.66% for the day. Over the past year, the stock has risen by 31.78%.
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