KUALA LUMPUR (Oct 20): 7-Eleven Malaysia Holdings Bhd’s share price jumped to a record high on Thursday (Oct 20), after rising as much as eight sen or 4.21% to RM1.98, possibly fuelled by developments that an American private equity (PE) fund is said to be eyeing the group’s pharmacy business with negotiations reported to be in an advanced stage.
7-Eleven owns 75% of Caring, while the remainder is held by Motivasi Optima Sdn Bhd. 7-Eleven’s largest shareholder is Berjaya Corp Bhd founder Tan Sri Vincent Tan, who controls 41.095% of the company.
The counter, however, pared its gains but finished the day still higher by seven sen or 3.68% to RM1.97, valuing the company at RM2.21 billion with 799,000 shares traded.
It was reported in The Edge recently that Carlyle Group — a US-based PE fund — is believed to have submitted a bid to buy Caring Pharmacy Group Bhd from 7-Eleven.
A source told The Edge that “both negotiations are at an advanced stage” and that Carlyle made a RM1.3 billion offer to buy the retail pharmacy chain, though 7-Eleven is seeking between RM1.5 billion and RM1.8 billion.
Such developments may also bode well for 7-Eleven’s shareholders, who may see a bumper dividend — should the sale of Caring turn out to be successful — similar to what happened at Affin Bank Bhd, when it announced its own special dividend following a successful divestment of its asset management unit.
Prior to this, 7-Eleven, citing a Bloomberg report in July, was said to be working with an adviser on the potential divestment of the pharmacy group and had attracted interest from some Japanese parties. It was also reported that the company could seek a valuation for the retailer of about US$400 million.
The following month, in August, 7-Eleven told The Edge that it was in preliminary stages of discussions with several parties to sell its stake in Caring.
Caring was previously listed on Bursa Malaysia from 2013 until May 2020, before 7-Eleven took over Caring in June 2020.
For the first six-month period, 7-Eleven Malaysia’s net profit expanded 292% to RM50.15 million from RM12.8 million, as cumulative six-month revenue climbed 33.73% to RM1.78 billion from RM1.33 billion. Revenue from the pharmaceutical segment increased by 37.4% to RM615.4 million, while net profit rose by 119.1% to RM28.7 million.
7-Eleven Malaysia sees share buy-back after an 18-month pause
Coincidentally, the sharp rise in the stock’s price comes at a time when the company had resumed its share buyback, after an 18-month pause since April 2021.
7-Eleven’s share price has risen to current levels of RM1.97, from its Oct 7 closing price of RM1.56.
Filings with Bursa Malaysia showed that the convenience store operator, which resumed the exercise on Oct 7, undertook its latest transaction on Wednesday for a cumulative buyback of 2.38 million shares, following several daily transactions.
According to 7-Eleven, the company spent RM3.9 million from Oct 7 to Wednesday (Oct 19) to buy the 2.38 million shares at between RM1.55 and RM1.88 each.
The company’s latest-reported cumulative number of net outstanding treasury shares stood at 110.4 million, following Wednesday’s transaction.
Prior to Wednesday’s share buyback, the last time 7-Eleven bought back its shares was on April 5, 2021, during which the company purchased 280,000 shares for RM402,900 at a per share price of RM1.43 to RM1.44, according to its Bursa filing dated April 5, 2021.
Following the transaction, 7-Eleven said its cumulative number of net outstanding treasury shares stood at 107.07 million.