TOKYO - A second vocal major investor is asking Tokyo-based Seven & i Holdings to consider spinning off its convenience store chain, 7-Eleven Inc. and replace board members.
Seven & i announced its earnings today: Operating profit rose 30.7% to a record 506.5 billion yen ($3.85 billion) in the financial year to end-February. For the financial year that began on March 1, Looking ahead, it forecast a 1.3% profit increase for fiscal 2023.
According to letter sent by hedge fund ValueAct Capital to the board on April 2, "ValueAct believes that Seven & i is at a pivotal point in its evolution, with a clear opportunity to create a global champion 7-Eleven company."
ValueAct took a 4.4% in Tokyo-based Seven & i in May 2021, when it first suggested that the 7-Eleven chain could be worth more than double its parent company's value if spun off.
In January, ValueAct again called for shareholders to support a spin-off and renewed the request last week. It also asked that the company replace four of its 14 board members.
Now Artisan Partners is joining ValueAct in the call for 7-Eleven to stand on its own, as well as for Seven & i to add new members to its board of directors, according to Reuters.
"We think the company should spin off 7-Eleven and that this could help close the valuation discount," Artisan Partners associate portfolio manager Ben Herrick told the news agency.
The investor's International Value Team bought Seven & i shares in 2019 and now holds about 1% of the Japanese company, which is valued at $38 billion.
"The board is currently discussing the shareholder proposals and new board composition, and we plan to announce our decisions in mid-April," Seven & i president Ryuichi Isaka told reporters and analysts today.
It is rumoured that Isaka is one of the board members ValueAct wants to replace.