In response to investor pressure to spin off the 7-Eleven convenience-store business, Seven & i Holdings Co. Ltd.’s board of directors confirmed the “value creation potential” of the company’s strategic plan and that it will “assess strategic options” such as spinoffs and initial public offerings (IPOs), the Tokyo-based company said.
“Under a newly constituted board with a majority of outside directors, Seven & i Holdings is taking significant actions to accelerate profitability and growth,” the board said.
“The Strategy Committee—consisting solely of the outside directors—has been created not only to advance the company’s strategy, but also to guide its successful execution and assess strategic options (IPO, spinoff, etc.) and recommend actions and/or changes,” it said. “In that light, along with our fellow board members, we are committed to rigorously assessing opportunities to create value for all stakeholders and adjusting our mid- and long-term strategies accordingly.”
The announcement follows a push by Seven & i investors ValueAct Capital, San Francisco, which owns a 4.4% stake, and Artisan Partners, Milwaukee, which holds approximately 1%, to get the global c-store conglomerate to spin off 7-Eleven to increase its valuation by separating it from other businesses.
“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 said in its latest letter and presentation. ValueAct also cited a “failed corporate strategy” and “governance failures” for its recommendations.
“Considering the engagement with number of top shareholders, including ValueAct, the company’s newly constituted board—consisting of a majority of outside directors—carefully considered a range of value creation opportunities,” Seven & i said. “As part of its Group Strategy Reevaluation, the board decision to add six outside directors to the board last year was itself the outcome of sincere and thoughtful shareholder feedback and discussions. After robust discussion and evaluation of the best medium-term strategic direction of the company, all of the directors of the board including the eight outside directors voted unanimously in favor of the March 9 plan and the creation of the Strategy Committee.”
It continued, “The plan articulates a strong focus on the successful convenience-store business and aligned on a clear vision for growth by recognizing the critical contributions ‘food’ related businesses make in a market increasingly dependent on private label and ready-to-eat meals. The growth strategy draws on our competitive strength in ‘food’ between the convenience and superstore businesses to drive global growth across formats.”
The board highlighted actions that the company has undertaken recently to enhance governance and accelerate growth. Among other steps to restructure its overall business, steps, Seven & :
- Appointed six new outside directors at the annual general meeting in May 2022, resulting in a board with a majority of outside directors.
- Accelerated investments in the c-store business in line with its strategy to transform the company into a global retail group with a core competitive strength in foodservice.
- Acquired Speedway and Sunoco’s company-owned c-store network and invested in the Vietnam business to expand the company’s c-store footprint globally.
“The entire board, along with the outside directors, is committed to maximizing corporate value through the execution of the company strategy, including driving growth in the convenience-store business and restructuring the superstore business,” Seven & i concluded. “The Strategy Committee of outside directors will provide active oversight and assess strategic options for the optimal course through which to create value for all stakeholders.”
The outside directors are Kunio Ito, Toshiro Yonemura, Yoshiyuki Izawa, Meyumi Yamada, Jenifer Simms Rogers, Paul Yonamine, Stephen Hayers Dacus and Elizabeth Miin Meyerdirk.
Seven & i said Thursday its sales for the year ended February rose 35% from the previous year to a record 11.8 trillion yen ($90 billion U.S.), becoming the first Japanese retailer to book more than 10 trillion yen in annual sales, according to Kyodo News. Increased overseas sales after the acquisition in 2021 of Speedway contributed to the earnings, the company said. Net profit rose 33.3% to 280.98 billion yen ($2.13 billion U.S.), also a record high, helped by recovering demand for its c-stores following the pandemic, said the report.
- 7-Eleven isNo. 1 on CSP’s 2023 Top 40 update to the 2022 Top 202 ranking of U.S. convenience-store chains by store count.
Irving, Texas-based 7-Eleven Inc. operates, franchises or licenses more than 83,000 convenience stores in 19 countries and regions, including about 13,000 in the United States, including about 9,500 under the 7-Eleven banner, around 3,800 under the Speedway banner and about 500 under the Stripes flag, as well as the Laredo Taco Company and Raise the Roost Chicken and Biscuits brands.
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