KKR and Bain Capital have each submitted first-round bids exceeding $5bn for the non-core assets of Japan’s Seven & i Holdings, according to a report by Reuters citing sources familiar with the matter.
KKR bid approximately JPY800bn ($5.1bn) for York Holdings, a unit being spun off by the Japanese retailer. Bain, a competing US firm, offered about JPY1.2tn, while local firm Japan Industrial Partners proposed around JPY750bn.
All three firms successfully advanced to the second round of bidding, sources said.
The offers surpass Seven & i’s expected enterprise value of JPY500bn – an amount that includes debt.
Seven & i is looking to spin off its non-core businesses, including its supermarket operations, into York Holdings, which will house 31 subsidiaries, including its superstore business, baby goods retailer Akachan Honpo, and the operator of Denny’s restaurants in Japan.
Separately, Seven & i’s founding family is in discussions to take the company private. This management buyout is part of a strategy to resist a $47bn takeover bid from Canada’s Alimentation Couche-Tard.
The three private equity firms are expected to submit binding offers, though they may adjust their bids after due diligence, sources noted. If negotiations with the current bidders fail, other first-round contenders could re-enter discussions.
Seven & i plans to select the preferred bidder by February, with a final decision expected in the spring. Additionally, the founding family has reportedly approached Bain and KKR for mezzanine financing to support the management buyout.
As of 24 December, Seven & i’s market capitalisation was JPY6.2tn. If the privatisation proceeds, it would become the largest ever for a Japanese company.
