Convenience store operator Seven-Eleven Japan Co Ltd has announced that it intends, through its wholly owned subsidiary IYG Holding Company to commence a tender offer for all of the outstanding shares of 7-Eleven Inc that it does not already own.
SEJ, directly and through IYGHC, owns approximately 72.7% of the outstanding common stock of SEI and intends to offer to acquire the balance of SEI common stock at a price of $32.50 per share in cash, representing a 15% premium over the closing price for SEI’s shares on 31 August 2005, it said.
In order to maintain SEI’s growth and to allow SEI to compete effectively in the increasingly competitive convenience store and retail industry over the long term, SEJ has concluded that SEI must increase its investment in merchandising, store renovation, distribution and logistics systems, and information systems, it said.
SEJ believes that SEI is now capable of funding such investment for SEI’s future growth from internally generated cash flow. The increase in investment, however, is likely to result in lower growth and profitability for SEI in the short term. SEJ believes that the offer provides SEI’s minority investors an opportunity to avoid risks relating to such lower short-term growth and profitability, and SEJ expects that taking SEI private will also help to achieve a better-governed group structure. SEJ believes that its plan to acquire the outstanding shares of SEI will not have a material impact on the consolidated financial performance of SEJ.