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ValueAct Challenge Marketing plan emphasizes a spin-off of 7-Eleven based on the number “7”

ValueAct Capital wants Seven & I Holdings to explain to shareholders why it is not spinning off its 7-Eleven convenience store chain or selling it.

The investment firm, which owns a 4.4% share and has been advocating for change since 2020, is intensifying pressure prior to the company’s results call on April 6 and the annual meeting where it hopes to replace four board members.

7-Eleven Tax-Free Spin-Off

“We have been unable to instill trust in Seven & i’s management or governance,” ValueAct claimed in an April 2 letter to the company’s board, adding that recent communications have heightened worries about entrenchment.

The investment business, which has a history of making investments in Japan and holds board seats at Olympus Corp and JSR Corp, has proposed a tax-free spin-off of 7-Eleven or possibly a sale of the entire company.

A spokesperson for the company was not immediately available for comment, and ValueAct declined to comment further beyond the letter.

The letter stated that Seven & I announced last month a “continuation of its status quo conglomerate structure,” which confused and dissatisfied markets.

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ValueAct Urges Companies To Answer Crucial Questions

valueact-challenge-marketing-plan-emphasizes-a-spin-off-of-7-eleven-based-on-the-number-7
ValueAct Capital wants Seven & I Holdings to explain to shareholders why it is not spinning off its 7-Eleven convenience store chain or selling it.

Does the board recognize how frustrating the conglomerate structure may be for shareholders, and has it examined the conglomerate discount?

And it wants to know what strategic alternatives were considered and why the business has not pursued a tax-free spin-off of 7-Eleven, as ValueAct demanded in January.

ValueAct had claimed that the spin-off may be completed in roughly a year through a listing on the Tokyo Stock Exchange.

It also wants to know why the company is not putting itself up for sale and if the board is aware of any takeover attempts for Seven & I within the past five years.

Seven & I said in March that, as part of a structural reform strategy, it will liquidate an additional 14 Ito-Yokado supermarkets in Japan and abandon the garment industry entirely.

The most recent letter from ValueAct supports its plan to replace four board members on the company’s 14-member board with four director candidates that it has not publicly disclosed.

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