Activist investor pushing for 7-Eleven spinoff


Dive Brief:

  • Activist investor ValueAct Capital is pushing for Seven & i Holdings, the parent company of 7-Eleven Inc. and 7-Eleven Japan, to spin off the convenience store arm into its own company, according to a Reuters report on Thursday.
  • San Francisco-based ValueAct — which owns shares worth just over 4% of the Japanese holding company, according to Reuters  believes Seven & i can “execute a tax-free spinoff to launch a global champion 7-Eleven listed on the Tokyo Stock Exchange about 12 months from now,” according to a letter it sent to Seven & i, which was seen by Reuters.
  • ValueAct is urging Seven & i shareholders to make their opinions on a spinoff known to the board of directors, in hopes of speeding up its decision.

Dive Insight:

ValueAct has said the growth potential of 7-Eleven, the largest c-store chain in the world, is hindered by the rest of the holding company. It has been pushing for this spinoff for a year.

“ValueAct estimates that over 10 years the 100% spinoff of 7-Eleven capital restructuring would result in shareholder value that is 80% higher than maintaining the current conglomerate structure,” Reuters quoted the recent letter as saying. 

Seven & i has reportedly promised to make a decision on the request by March, after ValueAct’s letter decried the slow pace of updates on a strategic review it has undertaken. 

This appeal comes two months after Seven & i entered into an agreement with Sugi Godo Kaisha to sell all the shares of its department store brands Sogo and SeibuThe closing date for that deal is expected to be Feb. 1, 2023. 

The convenience store segments make up the bulk of Seven & i, responsible for most of its revenue and operating income. A spinoff would free the convenience store segments from Ito-Yokado and York-Benimaru, two Japanese grocery store chains; and Seven & I Food Systems, a foodservice company that operates several restaurant chains and provides contact foodservice for some hospitals and schools. 

7-Eleven has over 79,000 stores across 20 countries, including over 20,000 in Japan, 13,000 in the U.S. and its recently opened first store in Israel.

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