Published: April 6, 2023

Calls for Seven & i Holdings to Spin Off 7-Eleven Grow Louder

TOKYO — Another investor is asking Seven & i Holdings to explore spinning off its convenience store chain, 7-Eleven Inc.

Artisan Partners joined hedge fund ValueAct Capital to push for 7-Eleven to stand on its own, as well as for Tokyo-based Seven & i to bring 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," said Ben Herrick, Artisan Partners associate portfolio manager.

Herrick works with the U.S. investment company's International Value Team, which has owned Seven & i shares since 2019 and currently holds around 1 percent of the Japanese company, which is valued at $38 billion, the news outlet added.

The report comes days after ValueAct sent an open letter to Seven & i's board requesting answers to nine questions during its earnings announcement on April 6. As part of these questions, ValueAct asked why the company is not pursuing a tax-free spinoff of 7-Eleven.

To read a copy of the letter, click here.

"Transparent and full answers to these questions will signal to the market that Seven & i hears the calls of shareholders and the substance of the issues at hand. Anything short of this will only increase shareholder perception of entrenchment and failed governance — the concerns which led ValueAct to recently submit shareholder proposals for the 18th Annual Shareholders' Meeting of Seven & i," ValueAct wrote. "We have proposed a strengthened board with the skills, independence and mandate to address the key questions of leadership and governance that are in line with the expectations of shareholders."

In mid-March, ValueAct called for the removal of four directors from the Japanese company's 14-member board, citing "a failed corporate strategy." At the time, ValueAct did not state how it would seek to oust the four directors, whom it did not publicly identify. The fund nominated four director candidates, who also were not named.

ValueAct has long been pushing for changes at Seven & i. The hedge fund took a 4.4 percent stake in 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 2022, the hedge fund announced its support for a new slate of candidates for the company's board of directors and again urged focus on the c-store business.

ValueAct raised the possibility of a 7-Eleven spinoff again earlier this year, a Convenience Store News reported in January.

Irving, Texas-based 7-Eleven operates, franchises and/or licenses more than 13,000 stores in the United States and Canada. In addition to 7-Eleven stores, the company operates and franchises Speedway, Stripes, Laredo Taco Company, and Raise the Roost Chicken and Biscuits locations. 

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