Activist investor looking to oust 4 Seven & i directors

Dive Brief:

Activist investor ValueAct Capital has informed Seven & i Holdings, the parent company of 7-Eleven Inc. and 7-Eleven Japan, that it submitted a shareholder motion to remove four directors from the retailer’s 14-member board of directors amid a “failed corporate strategy,” according to a Friday Reuters report.
In a letter sent to Seven & i — which was obtained by Reuters — ValueAct said it has grown frustrated that the retailer hasn’t adopted a strategy to grow faster and improve its profitability and stock price, despite previous pushes from ValueAct to do so in recent months.
This motion comes about eight weeks after ValueAct, which has a 4.4% stake in Seven & i, made a public push for the retailer to spin off its convenience store arm into a separate company.

Dive Insight:

According to the letter, Seven & i’s management has “repeatedly failed in spite of promises for synergies and structural reform,” causing a conglomerate discount of the company to persist in the marketplace.

Additionally, ValueAct said Seven & i’s board of directors “failed to disclose a reported acquisition proposal to the Company in 2020” and did not conduct an objective succession review or an independent strategic review in line with governance best practices.

The motion mentions 14 candidates who ValueAct wishes to fill Seven & i’s board of directors — 10 incumbents and four new faces, according to Nikkei Asia. Its proposal excludes current Seven & i President Ryuichi Isaka and Vice President Katsuhiro Goto.

Six new directors joined Seven & i’s board last year, and ValueAct supported those additions, according to Reuters.

Seven & i did not respond by press time in an inquiry from C-Store Dive on the motion. In a statement to Reuters, the retailer said it had received ValueAct’s letter and that “the Board of Directors will proceed to scrutinize and consider the contents of the proposal.”

Earlier this month, Seven & i told investors it planned to focus the company’s efforts more fully on its convenience store business and transition away from broader retail and department stores. This included building its fresh food, proprietary drink and private label departments, as well as combining the Ito-Yokado and York-Benimaru grocery chains into one entity called Metropolitan SST, reducing the number of Ito-Yokado stores from 126 to 93 in three years and exiting the apparel business. Seven & i also named board member Junro Ito, whose term starts April 1.

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