Big PE funds line up for 7-Eleven

7-Eleven is up for sale by its family owners. Picture: NCA NewsWire / James Gourley

Global buyout funds such as Brookfield and Blackstone are expected to be lining up for an acquisition of the $2bn-odd 7-Eleven, with such funds having made efforts to buy the business in the past.

DataRoom understands that at least one of the major US-based private equity firms, such as Brookfield, Blackstone, TPG Capital, The Carlyle Group and Kohlberg Kravis Roberts, has made an approach to buy 7-Eleven.

Brookfield was understood to have weighed an acquisition in the space before, considering a purchase of the On-The-Run fuel convenience stores.

While Canadian convenience store owner Couche-Tard is considered the most logical owner by many, the understanding is that 7-Eleven would not be an eager seller to its major competitor.

It is understood that 7-Eleven generates annual earnings before interest, tax, depreciation and amortisation of about $220m.

Market experts believe that such a business would likely sell for up to eight times its EBITDA. This would put a price tag on the business of about $1.8bn.

The space where 7-Eleven operates is highly competitive and can be complex when it comes to matters such as ensuring that there is no underpayment of staff.

The Australian reported in 2020 that the convenience store chain had paid $173.6m in wages, interest and superannuation to 4043 employees.

This was after franchisees were found to have deliberately falsified records to disguise underpayment of wages and 7-Eleven did not adequately detect or address non-compliance.

Since that time, 7-Eleven has made substantial improvements to its systems under a compliance partnership, such as a requirement that staff be paid electronically and the implantation of extensive high tech systems and staff training.

Working on the sale process is advisory firm Azure Capital.

It is understood that the owners hope to have concluded a sale process by the end of this financial year or early next financial year, which means an outcome could be less than two months away.

7-Eleven is owned by the Withers and Barlow families and operates everywhere in Australia except Tasmania, Northern Territory and South Australia, which creates growth opportunities for the buyer.

It has a licence to operate and franchise 7-Eleven stores in Australia from the US-based 7-Eleven.

It has 750 stores across Victoria, NSW and Western Australia, processing 250 million transactions each year.