SAN FRANCISCO, Feb. 8, 2022 /PRNewswire/ -- ValueAct Capital ("ValueAct"), a global investment firm with a position of approximately 4.4% of the shares outstanding in Seven & i Holdings ("Seven & i", "the Company"), today issued a public presentation on the transformation and value creation imperatives of Seven & i to facilitate dialogue among shareholders. ValueAct sent an open letter to the Seven & i board on January 25, 2022 formally requesting that the Outside Directors, who currently compose a minority of the Board of Directors, should (1) formally and promptly seek direct input from shareholders on key issues of strategy and governance and (2) form an independent committee to assess strategic alternatives. In a response on February 3, 2022, Seven & i neither granted ValueAct's formal requests nor provided strategic clarity. The Company's response continued to refer to ambiguous statements in the Medium-Term Management Plan rather than clarifying unequivocally whether transforming into a global champion 7-Eleven company is the strategic aim, which ValueAct believes is the straightforward strategic imperative from the standpoint of many stakeholders.
ValueAct believes shareholder intervention may now be necessary because of the long period of turmoil and poor performance at the Company, and years of private dialogue failing to produce adequate and timely responses from management on key issues. ValueAct believes that Seven & i has a lack of strategic focus, an ineffective management structure, and is dramatically underperforming its potential.
The presentation outlines ValueAct's belief that if Seven & i narrows its focus to 7-Eleven, it can become the global champion in a growing industry, whereas if its attention remains scattered, it risks being disrupted and continuing to produce poor results for many stakeholder groups. The presentation covers strategic initiatives that ValueAct believes would transform the Company into a global champion, significantly increase corporate value and remediate a management environment that has been disappointing to employees and many other stakeholder groups.
ValueAct has discussed these topics privately with the Company over the past year and believes top management's response to key issues has been indecisive, unclear, and unsatisfactory.
As detailed in the presentation hyperlinked below, ValueAct believes Seven & i's transformation could:
- Fix a corporate governance system that has persistently failed to align to shareholder interests
- Remediate the dysfunctional management environment and low employee morale
- Increase the focus on key competitive and sustainability risks which will have consequences for the Company and its stakeholders over decades
- More than double the share price and substantially increase long-term corporate value
ValueAct has a 21-year history of helping public companies around the world pursue successful transformations and long-term value creation through private dialogue and constructive relationship building. ValueAct engages publicly very rarely, only when it has determined that private dialogue alone will not yield the progress that all stakeholders should expect. Even in these situations, ValueAct remains open to making progress through constructive private dialogue with the investee company, including in the current discussions with Seven & i.
Japan's Stewardship Code for institutional investors encourages investors to engage with other institutional investors (collaborative engagement) as necessary, in addition to engaging independently with investee companies. ValueAct has already received interest from over thirty of the Company's largest investors to engage on the issues raised in their letter. ValueAct will engage with fellow shareholders to exchange views on Seven & i's strategic direction and governance structure to determine what steps need to be taken at the upcoming annual general meeting to ensure that stakeholder's interests are protected and enhanced, as well as support the Company's transformation to secure its long-term leadership in its core business, 7-Eleven.
To view the full presentation please visit https://valueact.com/presentations/.
About ValueAct Capital
ValueAct Capital, established in 2000, is a global investment firm managing capital on behalf of some of the world's largest institutional investors. The Firm's goal is to transform companies and help them become 21st Century Global Champions. ValueAct seeks to identify and invest in high-quality businesses that are temporarily under-valued, taking a patient, collaborative, and constructive approach to value building for all stakeholders with long-term investments. The firm generally holds 10-18 investments at any given time, and ValueAct Capital's internal team has built a track record serving on over 50 public company board seats. For more information, please see https://valueact.com/.
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