Reaction from Seven & 1
7-Eleven owner plans split as it resists record $47bn buyout proposal Japanese retail conglomerate seeks to streamline its operations as it fends off bid from Alimentation Couche-Tard Seven & i said on Thursday it would separate 31 subsidiary businesses to focus on its convenience store empire © Kim Kyung-hoon/Reuters 7-Eleven owner plans split as it resists record $47bn buyout proposal on x (opens in a new window) 7-Eleven owner plans split as it resists record $47bn buyout proposal on facebook (opens in a new window) 7-Eleven owner plans split as it resists record $47bn buyout proposal on linkedin (opens in a new window) Save current progress 100% David Keohane and Leo Lewis in Tokyo 6 HOURS AGO 4 Print this page Unlock the Editor’s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Seven & i Holdings plans to split its convenience store operations from non-core businesses as the Japanese retail conglomerate faces an unsolicited $47bn buyout proposal from Alimentation Couche-Tard. The 7-Eleven owner said on Thursday that it would separate 31 subsidiary businesses — including supermarkets such as Ito-Yokado, speciality stores and the Denny’s restaurant brand — and put them in a new holding company called York Holdings. The group then plans to bring in outside investors and prepare for a potential listing while keeping a minority stake. The company’s financial arm, Seven Bank, will also be carved out of the convenience store empire as Seven & i works to streamline its operations and raise its corporate value. The rest of the business — its convenience store empire in Japan, the US and the rest of the world — has been tentatively renamed 7-Eleven Corporation. The name change will be confirmed after a shareholder meeting in May. The reorganisation comes as Seven & i tries to prove to investors that it can increase its valuation and fend off the buyout proposal from Canada’s Couche-Tard. “We can further reinforce the convenience store business . . . and along with growth, capital efficiency will also need to addressed in running the business. I think that will actually create more value than what was proposed by Couche-Tard,” said Ryuichi Isaka, Seven & i chief executive. Seven & i, which operates 85,800 stores globally, has long been under pressure from activist shareholders, including San Francisco’s ValueAct Capital, to raise its valuation and focus on its convenience store business. That pressure has been ratcheted ever higher since the group swiftly rejected Couche-Tard’s $39bn opening offer in September, saying it “grossly” undervalued the business and did not account for the difficulty of getting a deal past US competition regulators. Couche-Tard, which operates the Circle-K brand, recently told the Japanese company it was willing to pay 20 per cent more, or close to $47bn, according to people familiar with the matter. On Wednesday, Seven & i confirmed “that it [had] received a revised confidential, private and non-binding proposal” and would “continue to act in the best interest of its shareholders”. The new proposal has “cleared the valuation hurdle”, according to four Seven & i investors. “I would be disappointed if Seven did not take this offer seriously,” said one large shareholder. “I want to see them negotiate and deal with this properly, as they have done so far.” Seven & i’s stock price has risen 30 per cent since before the first Couche-Tard offer in August. But at ¥2,325 ($16) a share, it is still below the Canadian company’s latest bid. Recommended LexSeven & i Holdings Co Ltd Couche-Tard’s pursuit will force 7-Eleven to mount a tougher defence Premium content If accepted, Couche-Tard’s takeover would be the largest in Japan by a foreign company and mark how corporate governance reforms are gaining traction in the country. The announcements on Thursday came as Seven & i slashed its forecast for operating income for the full year, which ends in February, to ¥403bn from ¥545bn, as inflation continues to weigh on the US convenience store business. The group also said its operating income for the second quarter was ¥127.7bn, a drop of 20 per cent from the same period the year before, missing analyst estimates of ¥144bn, according to LSEG data.