Shareholder Makes 7-Eleven Bid

"We still intend to move downtown," Carole Davidson, 7-Eleven's vice president of investor relations, tells GlobeSt.com. "Dallas will remain the headquarters for the US operation." In April, the corporation inked a 15-year lease, with a trio of five-year options, for about 300,000 sf in the 22-story One Arts Plaza, which broke ground on a 10-acre tract about six weeks ago.

Dallas corporate execs have set up a special committee to consider the majority owner's offer for the 27.3% remaining shares. The committee's marching orders requires a recommendation to shareholders on or before Sept. 19. "This is just the first step," Davidson says, careful not to speculate about the outcome despite the Japanese owner's clout. Nikko Citigroup Ltd. and Citigroup Global Markets Inc. are acting as financial advisers and Nishimura & Partners and Shearman & Sterling LLP, the legal adviser.

The majority owner's intent was announced in April when it formed a holding company, Seven & I Holdings Co. Ltd. to buy outstanding shares of IYG Holding Co. and its two majority-owned affiliates, 7-Eleven and Denny's Japan Co. Ltd. The tender offer, expected to begin Sept. 6, is $32.50 per share in cash for 7-Eleven's outstanding common stock. Yesterday's trading closed at $34.90 per share, up 60 cents after the bell rang and the buyout news hit the wires.

As detailed in yesterday's releases, 7-Eleven's majority owner--and Japan's largest convenience store owner--is increasing its investment to set up an across-the-board growth strategy--merchandising, store renovations, distribution and logistics systems and information systems. The dark side, though, is 7-Eleven's short-term profitability and growth are predicted to take a short-term dive. The Dallas corporation has 5,800 owned and franchised stores in the US and Canada.

Seven-Eleven Japan, a network of more than 10,000 convenience stores, is 51% owned by Ito-Yokado, a Japanese retailer and Denny's franchisee. Ito-Yokado and Seven-Eleven Japan provided the bailout money to revive the chain, formerly Southland Corp., when it went bankrupt in 1990.

The 78-year-old corporation has been exploring cost-savings measures for at least a year, including a headquarters site search that triggered a fierce competition in the marketplace. The Billingsley Co. won the nod with a proposal to build the first new high rise in the downtown in 18 years. The mixed-use project will have 425,000 sf of office space, 30,000 sf of retail and 110,000 sf of residential space in 60 condos.

The convenience store retailer's headquarters for more than two decades now fills about 400,000 sf of the 1.2-million-sf Cityplace Center at 2711 N. Haskell Ave. 7-Eleven sold the building in 2004 to Prentiss Properties Trust of Dallas for $124 million.