updated 9/1/2005 5:45:42 PM ET 2005-09-01T21:45:42

Seven-Eleven Japan Co. said Thursday it will launch a $1.2 billion cash tender offer for the 27.3 percent stake it doesn’t already own in its U.S. affiliate 7-Eleven Inc., in a move to take the world’s largest convenience store chain private.

Seven-Eleven Japan — which is Japan’s largest convenience store operator with more than 10,000 locations — is 51 percent owned by Japanese retailer and Denny’s franchisee Ito-Yokado.

The company, which already holds 72.7 percent of the U.S. 7-Eleven, has offered $32.50 a share in cash for the remaining shares. That represents a 15 percent premium over 7-Eleven’s Wednesday closing price of $28.34.

Dallas-based 7-Eleven said in a statement it had appointed a special committee of its board and expects the panel will advise shareholders on or before Sept. 19 on its evaluation of the offer. It operates or franchises approximately 5,800 7-Eleven stores in the United States and Canada.

Its shares rose $6.32, or 22.30 percent, to close at $34.66 Thursday on the New York Stock Exchange.

Seven-Eleven Japan, based in Tokyo, said that in order to better compete in the market, 7-Eleven must boost investment in its merchandising, store renovation, distribution and logistics systems, and information systems. The increase in investment, however, is likely to result in lower growth and profitability for 7-Eleven in the short term, the company said.

Seven-Eleven Japan also said it expects that taking 7-Eleven private will help achieve a better-governed group structure. The company expects to begin the tender offer, which doesn’t require 7-Eleven board approval, on or about Sept. 6.

In 1991, Seven-Eleven Japan and Ito-Yokado became shareholders in the U.S. 7-Eleven, formerly Southland Corp., to help revive the U.S. chain store, which went bankrupt in 1990. Earlier this year, Ito-Yokado transferred its stake in 7-Eleven to Seven-Eleven Japan.

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