Japanese convenience retailer Seven & i Holdings recently announced a significant reduction in its profit forecast for the fiscal year ending February 2025, slashing it by 44.4% to 163 billion yen. This revision comes after reporting first-half net profit of 52.24 billion yen on 6.04 trillion yen in revenue, with profits falling significantly below its previous guidance. The company attributed this decrease to a decline in customers at its overseas convenience stores who were taking a more cautious approach to consumption. Additionally, Seven & i recorded a charge of 45.88 billion yen related to the spin-off of Ito-Yokado Online Supermarket.
In response to growing pressure from investors to streamline its portfolio, Seven & i Holdings announced plans to restructure its non-core businesses by spinning them off into a standalone subsidiary. The company also revealed intentions to establish an intermediate holding company for its supermarket food business, specialty store, and other units, which would consolidate 31 entities. This move comes as the Japanese retail group faces a takeover attempt from Canada’s Alimentation Couche-Tard, which has made a revised bid valued at $18.19 per share.
After rejecting an initial takeover offer from ACT in September, Seven & i sought and obtained a new designation as a “core business” in Japan, triggering U.S. antitrust concerns. The revised bid from Canada’s ACT raises the possibility of a hostile takeover, although experts suggest that an outright hostile tender offer would be highly unlikely due to financing constraints. Despite the increased offer price, shareholders and activist investors may still seek to effect a change in the board’s composition to capitalize on frustrations over the lack of negotiations.
Seven & i Holdings’ shares have surged over 33% since news of the potential takeover by ACT became public in August. With approximately 85,800 stores compared to ACT’s 16,800, Seven & i is a dominant player in the convenience retail industry. The new offer price from ACT represents a 53% premium to pre-offer trading levels, indicating the Canadian company’s commitment to the deal. However, analysts suggest that the pressure is now on Seven & i management to demonstrate their ability to accelerate progress and maintain independence in the face of increasing shareholder and investor interest.
As the takeover saga continues, industry experts predict further developments in the negotiation process between Seven & i Holdings and ACT. While a hostile takeover may be improbable due to legal and financing constraints, the board faces mounting pressure to consider the revised offer seriously. Shareholders and activists are closely monitoring the situation, anticipating potential changes in the company’s composition or strategy. Ultimately, Seven & i Holdings must navigate carefully to address shareholder concerns, drive operational efficiencies, and safeguard the company’s long-term interests amidst the evolving dynamics of the takeover bid.
