Seven-Eleven Japan to Make Offer for Rest of U.S. Affiliate

Seven-Eleven Japan Co. said Thursday that it would launch a $1.2-billion cash tender offer for the 27.3% stake it doesn’t already own in its U.S. affiliate, 7-Eleven Inc., in a move to take the world’s largest convenience store chain private.

Seven-Eleven Japan -- which is Japan’s largest convenience store operator with more than 10,000 locations -- is 51% owned by Ito-Yokado, a Japanese retailer and Denny’s restaurant franchisee.

The company, which already holds 72.7% of the U.S. 7-Eleven, has offered $32.50 a share in cash for the remaining shares. That represents a 15% premium over 7-Eleven’s Wednesday closing price of $28.34.

Dallas-based 7-Eleven said in a statement that it had appointed a special committee of its board and expected that the panel would advise shareholders on or before Sept. 19 on its evaluation of the offer. It operates or franchises about 5,800 7-Eleven stores in the U.S. and Canada.

Its shares rose $6.32, or 22%, to $34.66 on Thursday.

Tokyo-based Seven-Eleven Japan said that to better compete in the market 7-Eleven must boost investment in its merchandising, store renovation, information systems and distribution and logistics systems. The increase in investment, however, will probably result in lower growth and profitability for 7-Eleven in the short term, the company said.

Seven-Eleven Japan expects to begin the tender offer, which doesn’t require 7-Eleven board approval, on or about Tuesday.