The founding family of Japanese retail giant Seven & i Holdings Co. is reportedly seeking an investment from Thailand’s Charoen Pokphand (CP) Group to support a management buyout, according to Japan’s national broadcaster NHK. This move is aimed at thwarting a potential $47 billion takeover bid by Canada’s Alimentation Couche-Tard Inc.
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CP Group Emerges as Potential Partner in Landmark Buyout
The founding family’s pursuit of a management buyout values Seven & i at approximately $58 billion, making it potentially the largest such deal in Japanese history. CP Group is the latest potential partner approached by the family to secure funding for this ambitious endeavor. The proposed investment from CP Group is estimated to be in the hundreds of billions of yen, with ongoing negotiations to finalize the exact amount.
Seven & i Holdings Co. declined to comment on the NHK report. However, CP All Pcl, a subsidiary of CP Group, released a statement acknowledging its investment policies prioritize business growth and prudent decision-making to benefit shareholders and stakeholders. While CP All did not directly confirm or deny its involvement in the potential Seven & i buyout, the statement suggests a cautious approach to any investment proposals.
Analyst Attaphol Tisayukata of TISCO Securities expressed skepticism about CP All’s likelihood of participating in the investment, citing limited synergy benefits as a key factor. This perspective adds further complexity to the unfolding situation. Shares of CP All experienced a significant decline, falling nearly 8% on Friday, exceeding the 1.6% drop of the overall domestic stock index.
Strategic Implications and Potential Alternatives
Previously, the founding family reportedly approached Japanese trading house Itochu Corp. and U.S. asset manager Apollo Global Management as potential funding sources. The management buyout, if successful, would maintain the existing leadership at Seven & i and potentially alleviate pressure to divest underperforming assets. However, some analysts suggest this strategy might be intended to elicit a higher bid from Couche-Tard.
Seven & i has faced increasing pressure from shareholders to streamline its operations and shed non-core businesses, including supermarkets, specialty stores, and restaurant franchises. The company recently announced the formation of a holding company to manage 31 subsidiaries. Sources indicate that U.S. private equity firms KKR & Co. and Bain Capital each submitted bids exceeding $5 billion for this spin-off.
Conclusion: A Complex Battle for Control of Seven & i
The potential investment from CP Group adds a new dimension to the ongoing battle for control of Seven & i. The founding family’s determination to pursue a management buyout signals a strong desire to maintain influence over the company’s future. While the outcome remains uncertain, this situation highlights the significant strategic and financial implications at stake. The involvement of major international players, including CP Group, Itochu, Apollo Global Management, KKR, and Bain Capital, underscores the intense interest in Seven & i’s vast retail network and its potential for future growth.
