Apollo Global Management Considers Major Stake In Seven & I’s Buyout Plan

Apollo Global Management Inc. is reportedly in discussions to take a significant equity stake in the proposed buyout of Seven & i Holdings, a move led by the founding Ito family to take the Japanese convenience store giant private. Sources familiar with the matter disclosed that Apollo, the US-based private equity firm, is exploring a commitment of up to ¥1.5 trillion ($9.5 billion) to support the deal, though the exact details remain confidential as the information is not yet public.

The buyout plan, still in the negotiation stages, would see Apollo join forces with the Ito family and Itochu Corp., the parent company of Japan’s FamilyMart convenience stores. According to sources, the Ito family is considering contributing around ¥500 billion, while Itochu is set to invest over ¥1 trillion. Other potential partners are also in talks regarding their stakes in the deal.

The current structure of the proposal involves total equity stakes of approximately ¥4 trillion, with the remaining financing expected to come from Japan’s major financial institutions. Sumitomo Mitsui Financial Group Inc., Mitsubishi UFJ Financial Group Inc., and Mizuho Financial Group Inc. are all reportedly slated to participate in the financing of the buyout.

Initially, the buyout was estimated to value Seven & i at ¥9 trillion, surpassing the ¥7.5 trillion offer from Alimentation Couche-Tard Inc., which had initially sparked the buyout speculation. However, sources noted that the valuation may be adjusted downwards, as Seven & i’s current market value hovers around ¥6.3 trillion, a dip following disappointing third-quarter earnings.

The news of Apollo’s potential involvement in the deal sent Seven & i’s stock price soaring by as much as 7.4% on Friday, reflecting positive market sentiment surrounding the buyout talks.

Shun Tanaka, a senior analyst at SBI Securities Co., pointed out that the new funding source significantly strengthens the buyout proposal, which could potentially increase investor confidence. “The fact that they’ve found additional financial backing is a big positive for shareholders,” Tanaka said. “This could either lead to a successful buyout or spur competing offers from other parties, raising expectations in the market.”

Negotiations are ongoing, with key details such as investment structure, voting rights distribution, and board composition still under discussion, sources revealed.

The management buyout (MBO) group is working against a tight timeline to finalize the proposal, hoping to beat out rival Alimentation Couche-Tard, whose unsolicited interest in Seven & i set off a wave of corporate activity last year. In addition to the buyout effort, Seven & i has announced a major restructuring plan to separate its convenience store business from its underperforming retail operations, aiming to boost the value of the former.

Should the Ito family-led bid succeed, it would rank among the largest corporate buyouts in history, marking a significant effort by Japan’s corporate sector to retain control of one of the country’s most iconic companies and prevent it from falling into foreign hands.

Seven & i’s Chief Financial Officer, Yoshimichi Maruyama, commented on Thursday that the company’s board is still reviewing both the Couche-Tard and Ito family proposals but has not yet received sufficient information to make an informed evaluation. “We are considering all options, including their feasibility,” Maruyama stated. “Both proposals have obstacles that need to be addressed, and we are awaiting more details from the buyout proposers.”

The company’s board is expected to make a final decision on the matter by its shareholders’ meeting in May, Maruyama confirmed.