Seven & I Holdings may have blamed overseas convenience store weakness for its disappointing quarterly result last week, but sources say this does not make it any less of a keen bidder for 7-Eleven Australia.
Analysts believe low interest rates in Japan mean companies there remain under pressure to put money to work, making the earnings less of a factor than for other groups.
Last week, it was reported that Seven & I Holdings missed expectations for its first quarter net profit, which fell 35 per cent due to weakness in its overseas-convenience and superstore businesses. It fell to 42.18 billion yen for the three months to May, despite first quarter revenue increasing 8.3 per cent.
Operating profit for its overseas convenience-store business fell 52 per cent to 20.98 billion yen and that of its superstore business declined 5.8 per cent to 3.32 billion yen, while earnings grew for its domestic store and financial services businesses.
But Seven & I kept its revenue and net profit forecasts for the fiscal year ending February 2024.
Seven & I Holdings has pre-emptive rights to buy 7-Eleven, being the franchise owner in Japan. Platinum Equity and Ampol, advised by UBS, are also in the contest.
Sources believe Ampol can pay the most, given the strategic benefits it would gain from owning the operation, but the question is whether it will get approval from the Australian Competition & Consumer Commission.
7-Eleven is up for sale through Azure Capital on behalf of the owners, the Withers and Barlow families. It generates annual earnings before interest, tax, depreciation and amortisation of about $220m. It has a licence to operate and franchise 7-Eleven stores in Australia from the US-based 7-Eleven. It has 750 stores in Victoria, NSW and Western Australia, processing 250 million transactions each year.
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