Citigroup, BofA to Finance Seven & i Management Buyout
Tokyo, Japan - The consortium seeking to privatize Seven & i Holdings Co. (TYO: 3382) has secured financing from Citigroup Inc. (NYSE: C) and Bank of America Corp. (NYSE: BAC), adding to the growing pool of entities involved in the record-breaking management buyout bid.
Citigroup and BofA will provide refinancing for the debt of Seven & i's US unit, which accounted for 56% of its total ¥2.7 trillion ($17.8 billion) debt in November 2024. The debt is expected to be syndicated to external investors.
Thai conglomerate CP All Plc (BKK: CPALL) is also considering a potential equity stake of around ¥500 billion in the management buyout, joining the effort initiated by Seven & i's founding Ito family and FamilyMart operator Itochu Corp. (TYO: 8001) in 2024. CP All's shares declined by up to 5% on Thursday amidst concerns over increased interest expenses that could impact its profitability.
The latest developments follow Seven & i's efforts to ward off a takeover bid from Canadian retailer Alimentation Couche-Tard Inc. (TSX: ATD.B) in August 2024. Representatives from Citigroup and BofA declined to comment on the matter.
The management buyout proposal involves an equity commitment of approximately ¥4 trillion, with the Ito family contributing ¥500 billion and Itochu over ¥1 trillion. The remaining funds will be sourced from bank financing.
Apollo Global Management Inc. (NYSE: APO) and KKR & Co. (NYSE: KKR) are reportedly in talks to participate with sizable commitments. Japanese financial institutions, including Sumitomo Mitsui Financial Group Inc. (TYO: 8316), Mitsubishi UFJ Financial Group Inc. (TYO: 8306), and Mizuho Financial Group Inc. (TYO: 8411), will also contribute to the financing.
A successful bid would allow Seven & i to restructure in private, marking a collective effort by Japanese corporations to retain ownership of the iconic brand.