Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Exclusive-ValueAct takes stake in 7-Eleven owner, says changes could boost share price

Stock MarketsMay 12, 2021 01:36PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: A man uses a mobile phone outside a 7-Eleven convenience store in Tokyo, Japan December 6, 2017. REUTERS/Toru Hanai 2/2

By Svea Herbst-Bayliss

(Reuters) -Activist investor ValueAct Capital has amassed a $1.53 billion stake in Seven & i Holdings and would like the Japanese owner of the 7-Eleven convenience store chain to consider changes, including a potential break-up.

ValueAct told its investors on Wednesday in a letter seen by Reuters that it built a 4.4% stake in Seven & i and believes that the sum of its parts is worth much more than its current market value.

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.

The new stake in Seven & i marks a return to Japan for ValueAct, where shareholder activism is gaining traction and the firm has considerable experience, having made an investment in Nintendo last year and having previously bet on Olympus Corp and JSR Corp.

Seven & i last year spent $21 billion to buy the Speedway convenience stores.

7-Eleven's convenience stores are a consistent, high-return business, while Seven & i's other retail and financial assets, such as real estate have not contributed to cash flow of late even though they are backed by valuable assets, the investment firm noted.

"We invested in Seven & i Holdings at an estimated P/E ratio of 11 times, while global peers trade at 15 times to 25 times," ValueAct said in the letter.

The company's shares that are traded in the United States climbed 4% on a day the broader market is down. Seven & i did not immediately respond to a request seeking comment.

ValueAct declined to comment. The investment firm, run by Mason Morfit, is up 18% since January after returning 12.5% last year, an investor in the firm said.

ValueAct underscored the role 7-Eleven could play for Japan in the letter, arguing it could become what McDonald's Corp (NYSE:MCD) and Starbucks Corp (NASDAQ:SBUX) are to the United States, what Inditex (MC:ITX) is to Spain and Aldi is to Germany.

But work is necessary to achieve these goals, ValueAct said noting that 7-Eleven would need to speed up its global digitalization strategy. In the United States it could focus more on food, which can be quickly tailored to tastes, and cut corporate costs.

Over the last months, ValueAct 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, it said in the letter.

The letter reflects ValueAct's style of collaborating with management by making suggestions instead of dictating terms to management and the board.

Over decades ValueAct has distinguished itself from other activist investors. While rivals often publicly demand board seats and push management to accept their plans quickly, ValueAct prefers to work behind the scenes, making few public statements or releasing detailed plans for change.

In the letter ValueAct also said that this new investment echoes the firm's previous investments in Japan.

"The challenges and opportunities facing Seven & i—strategy, organizational design, digitalization and ESG—are very familiar to us," the letter said. ValueAct has helped facilitate sales of businesses at Olympus and JSR.

Exclusive-ValueAct takes stake in 7-Eleven owner, says changes could boost share price
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email