(Bloomberg) -- Seven & i Holdings Co., the convenience-store operator facing a takeover approach from Canada’s Alimentation Couche-Tard Inc., plans to reduce its stake in its banking unit to 38% as part of a broader revamp, people with knowledge of the matter said.
The retailer’s 46% stake in Seven Bank Ltd., which offers banking services and access to ATMs at 7-Elevens and other locations across Japan, could raise around ¥30 billion ($195 million) by the end of the current fiscal year in February, said the people, who asked not to be identified because details of the plan haven’t been announced.
A representative for Seven Bank declined to comment, while a spokesperson for Seven & i wasn’t immediately available for comment.
The Japanese retail and convenience-store company embarked on a broad restructuring of its business after news of Couche-Tard’s approach became public in August, with plans to split off its supermarket and bigger stores. When the announcement was made last month, Chief Executive Officer Ryuichi Isaka didn’t go into detail on the fate of Seven Bank; news of the stake sale was reported earlier by Bloomberg News.
Ito-Yokado Co. and York-Benimaru Co., which are within the group to be split from Seven & i’s convenience-stores business, plan to sell their combined 7.8% holding in Seven Bank as part of the revamp, the people said.
The direct banking network, which has grown to become an important element of the retailer’s business in Japan over the past two decades, would no longer be accounted for as a subsidiary and is a sign that Seven & i is putting greater focus on the core convenience-store operations, they added.
Seven & i is facing pressure to move ahead with the broader structuring and show it can command a higher valuation for its business, whether in negotiations or through its own efforts. The 7-Eleven owner rejected Couche-Tard’s initially indicated offer, saying that it didn’t fully reflect the company’s worth.
Since then, Circle K owner Couche-Tard has said it is willing to pay $18.19, or ¥2,771, a share for Seven & i, valuing the Japanese company at around ¥7.2 trillion ($47.4 billion), a premium of more than 50% since the approach first became public. Seven & i’s shares have been stuck well below the Canadian retailer’s price, and are currently trading at around ¥2,200.
More independence from Seven & i could also lead to new growth opportunities for Seven Bank. The business was founded in 2001 to offer banking services 24 hours a day, 365 days a year, using ATMs in 7-Eleven stores at a time when most banks operated under limited hours. Since then, it has become a key part of the group’s business, with about 27,000 machines across Japan, 16,500 overseas and tie-ups with 640 other financial institutions.
Japan’s retail banking sector is seeing big changes, with the Bank of Japan seeking to normalize monetary policy after three decades of an ultra-loose stance. There’s greater competition from non-traditional business offering financial services, including from East Japan Railway Co. and the PayPay mobile payments business, which is majority-owned by SoftBank Group Corp.’s telecommunications unit.
In its 2024 annual report, Seven Bank said that it would seek to expand lending, and develop strategies to push deeper into retail, corporate and overseas banking. It’s also considering merger deals to achieve its financial goals, according to the report, published in July.
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