July 8, 2020 / 8:19 AM / a month ago

Itochu launching $5.4 billion tender offer for rest of FamilyMart

TOKYO (Reuters) - Japanese trading house Itochu Corp on Wednesday announced a 581 billion yen ($5.4 billion) tender offer for the rest of convenience store FamilyMart Co, seeking full control of a business facing slow growth and tough competition.

Itochu, which owns 50.1% of the FamilyMart chain, will offer 2,300 yen per share, a 31% premium to Wednesday’s closing price. The offer runs from Thursday through Aug. 24 and Itochu expects to delist FamilyMart if the bid is successful.

FamilyMart, Japan’s second-biggest convenience store chain with more than 16,000 outlets across the country, said it supported the offer.

Itochu said it wanted full control of FamilyMart in part to speed up decision-making at the chain, which competes with 7-Eleven, part of retail giant Seven & i Holdings, and Lawson Inc, owned by trading house Mitsubishi Corp.

The stores, ubiquitous in Japan and offering everything from “bento” pre-made meals to socks and underwear, have faced slower growth in recent years.

In addition to a shrinking population and sluggish consumer spending, the industry is also grappling with a shortage of workers and tough competition from drugstores, which started selling food following deregulation.

Full ownership would also allow Itochu to shift further away from the struggling energy and mining businesses to focus on the consumer sector, which offers more stability as well as a chance to leverage its other food operations. Itochu acquired Dole Food Company’s Asian fresh produce and worldwide packaged food business in 2013.

After the tender offer, Itochu will sell a 4.9% stake in FamilyMart to Norinchukin Bank for 57 billion yen and will retain a 94.7% stake, the trading house said.

Although retailers in the world’s third-largest economy have been hit hard by the coronavirus crisis, convenience stores have avoided some of the worst of the damage due to consumers’ need for daily items.

($1 = 107.4900 yen)

($1 = 107.2700 yen)

Reporting by Chris Gallagher and Yuki Nitta; Writing by Ritsuko Ando; editing by Mark Potter and Louise Heavens

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