Japanese Seven & i Holdings Reportedly Eyes Polish Żabka Chain Acquisition

Japanese retail giant Seven & i Holdings, owner of the 7-Eleven chain, is reportedly in talks to acquire the Polish convenience store operator Żabka. The news has already boosted Żabka's stock, with shares climbing nearly 20% since July 16th, the day the potential takeover was first reported. However, Żabka has officially stated it does not comment on rumors regarding potential transactions involving its shares.

The potential acquisition is subject to complex regulatory frameworks. While Żabka is registered in Luxembourg, where a mandatory tender offer is triggered upon crossing a 33.3% voting threshold, the terms of such an offer would be governed by Polish law. Currently, the investment fund CVC is the largest shareholder with 37.6% of Żabka's shares, meaning Seven & i Holdings would likely have to announce a tender offer if they acquire CVC's stake.

Valued at over 33 billion Polish zloty (approximately $8.3 billion USD), Żabka represents a significant investment. Reports suggest the Japanese company might spend hundreds of billions of yen, translating to billions of dollars, depending on the stake acquired. Financing a full takeover would also involve assuming Żabka's substantial debt, which currently has a net debt to EBITDA ratio exceeding 2.

Despite the financial and regulatory hurdles, the acquisition is seen as potentially attractive. Konrad Księżopolski, an M&A executive at Haiton, notes Żabka's strong position in Central Europe's growing markets. He suggests that pursuing full control, even with increased debt, could be a compelling prospect to capitalize on the company's fundamental growth.

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Biorąc pod uwagę atrakcyjność Żabki z jej ekspozycją na najszybciej rosnące i bogacące się kraje Europy Środkowej, wejście po pełną kontrolę i czerpanie pełnych korzyści ze wzrostu fundamentalnego powinno moim zdaniem być kuszącą perspektywą, nawet kosztem przejściowo zwiększonego długu.