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Seven & i: founding family unable of securing funding for $58 billion purchase

Seven & I Holdings, a Japanese company, said that the Ito family's founders could not secure financing for a management buyout of $58 billion. It would instead consider a competing offer from Alimentation Couche-Tard in Canada.

7&i said that it was not able to take action on any proposal made by Mr. Junro Ito or Ito-Kogyo at this point.

"7&i is committed to exploring every opportunity to unlock value for its shareholders. We continue to evaluate a range of strategic options, including Alimentation Couche-Tard's proposal." Itochu announced in a press release that it no longer considered participating in the Seven & I founder family's proposed buyout.

The failure of this management buyout increases the likelihood that Couche-Tard will pull off a massive acquisition of 7-Eleven, one of Japan's most popular and well-known retailers. Seven & i shares fell 12% while Itochu's rose more than 6% on Thursday morning in Tokyo after the retailer confirmed a Yomiuri report that they were abandoning the management buyout.

The $47 billion bid by Circle K convenience store owner Couche-Tard for Seven & I in recent years is one of many examples of international interest in Japanese assets. A return to deflation, and a deepening of corporate governance reforms, have attracted more investors into a market that was once considered untouchable by foreigners.

A spokesperson from the Canadian retailer stated on Wednesday that Couche-Tard remained dedicated to achieving a transaction that was mutually beneficial for both parties.

Seven & i’s founding family began talks after receiving a takeover offer from Couche-Tard in the past year. If successful, it would have been the biggest management buyout ever in history.

Couche-Tard initially offered $38.5 billion but increased it to $47.4 billion when Seven & I refused the bid. (Reporting and editing by Leslie Adler, Jamie Freed and Leslie Adler; Additional reporting and editing by Mariko Katsuyama and Kantaro Sugiyama)

(source: Reuters)