Seven & i abandons Żabka takeover after price disagreement, shares plunge 14%

The collapsed deal

On Saturday, July 25, Japanese retail conglomerate Seven & i Holdings, owner of the 7-Eleven convenience store chain, announced it had ended negotiations to acquire a stake in Polish convenience chain Żabka. The company said it could not reach an agreement with the sellers on terms that would serve the best interests of its shareholders and partners. No specific reasons were given, and neither Seven & i nor Żabka's leading shareholders responded to requests for comment.

“The company was unable to reach an agreement with the seller on terms that it believed would be in the best interest of Seven & i Holdings shareholders and other partners.”

The talks had been first reported by Japanese business daily Nikkei on July 16, which said Seven & i was in the final stages of arranging an investment worth several hundred billion yen. The news sent Żabka shares soaring: they jumped 10.9% on the day of the report and another 8.3% the following day. The stock hit a peak above 33 PLN on July 21, up from its IPO price of 21.5 PLN in autumn 2024. A dividend of 1.7% was detached on July 24.

Market reaction

When trading resumed on Monday, July 27, Żabka shares plunged. At the opening, the stock fell 11.2% to 27.66 PLN, while the broader WIG20 index rose 0.56%. The sell-off deepened to as much as 14% intraday, with the price touching 26.93 PLN at its lowest point. By afternoon, the decline moderated to around 10%, with shares trading near 28 PLN.

Turnover was exceptionally high. In the first half of the session alone, shares worth 170 mln PLN changed hands, the highest on the Warsaw Stock Exchange. For the full day, volume reached 156 mln PLN, outpacing blue-chips like PKO BP (155 mln PLN) and Orlen (100 mln PLN). The stock did not fall all the way back to its pre-rumor level, which some analysts interpreted as a sign that the market believes negotiations could eventually resume at a lower price.

Who owns Żabka

The seller side in the failed negotiations consisted mainly of private equity funds. The largest shareholder is Luxembourg-based Heket Topco S.à r.l., a vehicle of CVC Capital Partners, with 37.6% of the shares. PG Investment Company 1113B S.à r.l. holds another 10%. Other notable holders include Norway's sovereign wealth fund Norges Bank (3.3%) and Polish pension funds OFE Nationale Nederlanden (3.2%), OFE Generali (3.2%), and OFE Allianz Polska (3.1%).

CVC (Heket Topco)37.6%

PG Investment10%

Norges Bank3.3%

OFE Nationale Nederlanden3.2%

OFE Generali3.2%

OFE Allianz Polska3.1%

Others39.6%

CVC (Heket Topco)

37.6 %

PG Investment

10 %

Norges Bank

3.3 %

OFE Nationale Nederlanden

3.2 %

OFE Generali

3.2 %

OFE Allianz Polska

3.1 %

Others

39.6 %

Data from the article text

Analysts cited by local media suggested that the price demanded by these shareholders may have been too high, or that the leak of the negotiations drove up the market price, making the deal less attractive. The Japanese statement's use of the phrase "at this time" left some room for interpretation, with some market participants speculating that Seven & i could return with a lower offer.

What next for Seven & i

Despite the setback, Seven & i signaled it remains interested in Europe. In its statement, the company said the continent is an attractive growth opportunity and it will continue to evaluate possibilities in the region that align with its strategy.

“Europe remains an attractive growth opportunity for the company. Seven & i Holdings will continue to analyze opportunities in the region that are consistent with its strategy.”

Żabka, with nearly 13,000 stores in Poland and Romania, would have given the Japanese giant a foothold in Central Europe. Seven & i operates 85,000 stores globally, mostly in Asia and North America. The company has been looking to expand abroad, and the failed Żabka bid is unlikely to be its last attempt in Europe.