Apollo Global Management Inc. (APO) is considering a substantial stake in a bid by Seven & i’s founding Ito family to take the Japanese convenience store operator private, according to people familiar with the matter. The US private equity giant is discussing a commitment of as much as ¥1.5 trillion ($9.5 billion) for an equity stake in the plan, said the people, who asked not to be identified as the information isn’t public.

Under the current proposal, which is subject to change, Apollo would join the Ito family and Itochu Corp., the operator of FamilyMarts in Japan, as key investors. The Ito family is weighing a commitment of around ¥500 billion and Itochu more than ¥1 trillion. Other partners are still negotiating stakes. The present proposal sees equity stakes making up about ¥4 trillion combined, although that doesn’t necessarily mean Apollo will secure majority control because the terms are still being negotiated. The rest of the financing coming from Japan’s top banks, the people said. Sumitomo Mitsui Financial Group Inc., Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. are set to participate in the deal.

The valuation of the buyout effort was originally planned for ¥9 trillion — trumping the ¥7.5 trillion takeover bid from Alimentation Couche-Tard Inc. (ANCTF) — but may be lowered as Seven & i’s market value remains well below the proposals, the people said. Seven & i’s market valuation on Friday hovered around ¥6.3 trillion after stocks dipped over third quarter earnings.

Shares of Seven & i extended gains Friday, climbing 4.9% at the close in after Bloomberg reported news of the discussions. “The current MBO proposal is already high, so the fact that they’ve found another source of funding is a big positive for shareholders,” said Shun Tanaka, a senior analyst at SBI Securities Co., adding that it raises the possibility of a buyout happening or higher offers by others.

Details of the deal, such as the investment structure, the ratio of voting rights and the composition of the board members, are still being negotiated, the people said. The management buyout consortium is racing to finalize a proposal ahead of Couche-Tard, whose unsolicited interest in Seven & i set off a frenzy at the staid Japanese retail giant last year. Besides the take-private plan, Seven & i has also announced a radical restructuring to separate its convenience store business from the weaker retail operations, pledging to raise the value of the former.




The deal is a significant change in Japan’s corporate landscape, as domestic interests rally to retain control of the 7-Eleven operator. The company was recently added to Japan’s Foreign Exchange and Foreign Trade Act watchlist, though Finance Minister Shunichi Suzuki indicated this wouldn’t necessarily impede foreign investment. Seven & i Holdings is undergoing strategic restructuring and expansion while facing investor pressure from takeover bids, including a counterproposal from a member of its founding family. Apollo did not immediately respond to Benzinga's request for comment.

In conclusion, Apollo Global Management's potential investment in the Seven & i buyout bid signals a significant shift in the Japanese retail landscape, as domestic interests unite to maintain control of the iconic 7-Eleven brand. The proposed deal, valued at up to ¥9 trillion, would be one of the largest buyouts on record and reflects a successful unified effort by corporate Japan to keep one of the country’s most famous companies from falling into foreign hands. As negotiations continue, investors eagerly await the outcome of this high-stakes battle for the convenience store giant.