Seven & i shares surge after news of ValueAct's stake build-up
Reuters
Published May 12, 2021 11:46PM ET
Updated May 13, 2021 04:16AM ET
By Junko Fujita
TOKYO (Reuters) - Shares of Seven & i Holdings surged to a two-year high on Thursday after Reuters reported activist investor ValueAct Capital took a stake in the Japanese owner of the 7-Eleven chain, signalling a potential shake-up at the retail giant.
ValueAct amassed a 4.4% stake in Seven & i and believes the sum of its parts is worth much more than its current market value, the fund told investors in a letter seen by Reuters.
The hedge fund said the 7-Eleven business could be worth more than double what its parent is currently valued at if the company restructures itself to focus on the convenience stores or if 7-Eleven is spun out.
"I share the same opinion. Seven & i will be better off focusing on the capital-light convenience store business," said Oshadhi Kumarasiri, equity analyst at LightStream Research, publishing on the Smartkarma platform.
In a statement, Seven & i declined to comment on individual shareholder matters. It said it would continue to engage in dialogue with its shareholders.
In addition to 7-Eleven, arguably one of the world's best known convenience stores, Seven & i's businesses include department stores, supermarkets and financial services. Last year it spent $21 billion to buy Speedway convenience stores in North America.
Seven & i shares gained as much as 7.4% to their highest in more than two years on Thursday before closing up 5.0% compared to the broader Nikkei stock average's 2.5% fall.
After Thursday's gains, the company had a market value of about $39 billion, making ValueAct's stake worth about $1.7 billion.
For a graphic on Seven & i shares:
https://fingfx.thomsonreuters.com/gfx/mkt/gjnpwnjkxvw/image-1620869507510.png
This is not the first time that Tokyo-headquartered Seven & i has caught the fancy of an activist investor. Five years ago, Daniel Loeb's Third Point (NYSE:SPNT) successfully engineered a management reshuffle at the company but the drastic restructuring it had suggested did not come about.
The situation in Japan, however, has changed considerably since then, with shareholder activism gaining momentum amid a government push for better corporate governance and higher returns to investors.
ValueAct, whose style is of collaborating with management by making suggestions instead of dictating terms to management and the board, said in the letter it has engaged with Seven & i's board directors and management and is optimistic that it can continue to build trust and alignment with the company.
Get The News You Want
San Francisco-based ValueAct has had some notable success in Japan, where companies traditionally have been wary of activist investors.
One of the fund's partners, Robert Hale, joined the board of Olympus Corp in 2019. Shares in the maker of endoscopes have nearly trebled since early 2019.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.