Written by Miho Oranaka, Makiko Yamazaki, and Ritsuko Shimizu
TOKYO (Reuters) – Private equity firms KKR and Bain Capital each offered more than $5 billion in first-round bids for non-core assets of Japan's Seven & i Holdings, according to people familiar with the matter.
KKR has offered about 800 billion yen ($5.1 billion) for York Holdings, an entity set to be spun off from the Japanese retailer, two of the people said. One of the sources said that rival US company Bain had offered about 1.2 trillion yen. Local buyout firm Japan Industrial Partners has offered about 750 billion yen, one of the sources said.
The three companies were successful in the first round of bidding to buy the assets, according to two of the people. Reuters spoke to three people about the first-round bids, all of whom declined to reveal their identities because the information had not been made public. The size of the bids has not been previously reported.
The bids exceed the enterprise value of 500 billion yen — a measure that includes debt — expected by 7-Eleven's owner, according to one of the people.
A Seven&i spokesman declined to comment, saying the bidding process was not public. KKR, Bain, and Japan Industrial Partners also declined to comment.
Seven & i is looking to divest non-core businesses, including its sprawling supermarket operations, into its York Holdings unit, which will include 31 subsidiaries including the group's department store business, children's goods retailer Akachan Honpo and the company that runs Denny's ( NASDAQ:) Restaurants in Japan.
Separately, the retailer's founding family is in talks to take Seven&i private. The deal, a management buyout, is intended to stave off a $47 billion takeover bid from Canadian Alimentation Couche-Tard.
The three private equity firms will now submit legally binding proposals, but may change their offers after due diligence, two of the people said. The non-winning bidders from the first round could still enter negotiations if the three fail to reach an agreement with Seven&i, two of the people said.
Seven&i aims to pick the winning bid as early as February, one of the people said. Another person said the decision would be finalized by spring.
The founding family has also approached Bain and KKR about mezzanine financing for a management buyout, two of the people said.
Seven&i's market capitalization was 6.2 trillion yen as of December 24. The privatization, if achieved, would be the largest ever for a Japanese company.
($1 = 157.0300 yen)
