Recent reports indicate that Seven & i Holdings, the parent company of 7-Eleven in Japan, is contemplating the sale of its supermarket division amid a takeover attempt by Canadian rival Alimentation Couche-Tard. According to sources familiar with the situation, Seven & i is currently in talks with potential buyers for its Ito Yokado supermarket chain.
Bloomberg has reported that Seven & i has reached out to private equity firms and other institutions to discuss the possibility of divesting several businesses within its supermarket division. Insiders suggest that, with an EBITDA multiple ranging from six to eight times, the sale could generate between 320 billion to 430 billion yen, roughly translating to about 2.2 billion to 2.9 billion dollars. While these discussions are still in the early stages, there remains a chance they could fall through, or that Seven & i might decide to hold on to a minority stake.
The decision to offload its supermarket assets is part of Seven & i’s strategy to refocus on its more profitable convenience store operations. After turning down Couche-Tard’s acquisition proposal, the company now faces the challenge of demonstrating a higher valuation, as the bid was perceived to be undervalued.
A spokesperson for Seven & i commented that no announcements or final decisions have been made at this time.
In addition to Ito Yokado, Seven Bank is also among the important businesses that Seven & i is considering selling as part of this restructuring process.
The performance of Seven & i’s supermarket operations has underwhelmed, reporting annual operating profits of just 13.5 billion yen as of February this year. This significantly lags behind the 301.6 billion yen profits generated by overseas convenience stores and the 250.5 billion yen from domestic operations. A report from JPMorgan analysts in August estimated the value of Seven & i’s supermarket division at around 232.4 billion yen.
