(Bloomberg) — Seven & i Holdings Co.’s recently announced restructuring plan is “too little, too late” and was designed to thwart Alimentation Couche-Tard Inc.’s takeover proposal, a shareholder in the Japanese retailer said.
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The board should enter into negotiations with the Canadian operator of Circle K stores and seek a price that maximizes shareholder value, the Artisan Partners International Value Team wrote in a letter published on Wednesday.
Last week, Seven & i unveiled a plan to split in two, with one business focused on 7-Eleven, convenience stores and gasoline stations, and another that would be a collection of 31 less profitable retail operations that might bring in strategic partners. Prior to that, Couche-Tard had sent Seven & i a new potential acquisition price of ¥7.1 trillion ($47.6 billion), people with knowledge of the matter said.
“The price currently being offered by ACT is clearly superior to the speculative value that could potentially be achieved by implementing the restructuring plan at this late date,” Artisan Partners wrote in the letter.
A representative for Seven & i wasn’t immediately available for comment.
So far, Seven & i’s shares remain stuck below Couche Tard’s proposed price of $18.19, or around ¥2,714 at the current exchange rate, suggesting market skepticism over the possibility of a consummated deal. That figure is 20% more than the prior indicated offer, and a 50% premium from where the shares were trading at in mid-August, before the Canadian company’s approach became public.
Artisan Partners also called for the members of Seven & i’s special board committee to be disclosed “to maintain accountability and in keeping with standard practice.”
Seven & i will keep a minority stake in the retail business that will be split off and called York Holdings Co. An investor relations day is being planned for Oct. 24 to provide more details on the initiative.
Seven & i has “chronically suffered from ineffective oversight and accountability, resulting in a persistent valuation discount,” Artisan Partners said. “At a critical juncture in its history, we encourage you to ensure fair, independent and transparent processes to maximize shareholder value.”
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