Seven & i Holdings Shares Strategic Update on ACT Engagement and Succession Planning

In a recent communication with its shareholders, Seven & i Holdings Co., Ltd. (commonly referred to as 7&i) provided crucial insights into its ongoing discussions with Alimentation Couche-Tard (ACT) regarding antitrust issues and its internal succession planning process. This letter, addressed to investors, reflects the company's strategic effort to enhance shareholder engagement amidst significant market changes.

Understanding the Background

The company has been navigating a transformative phase, focusing intensively on its convenience store operations while aiming to unlock valuable opportunities for shareholders. The letter acknowledges positive interactions with investors while expressing disappointment over Artisan Partners Asset Management's jump to conclusions regarding the company's intentions to enhance shareholder value.

Engaging with Alimentation Couche-Tard

Since July of the previous year, 7&i has established a Special Committee consisting of independent directors to thoroughly evaluate ACT's acquisition proposal and other potential pathways to increase value for stakeholders. This committee's responsibility involves ensuring an objective assessment of ACT's engagement without rushing to judgment.

Over the past months, the committee has convened over 30 meetings to explore various options that could potentially yield higher value. A significant concern remains the antitrust hurdles that accompany a merger between 7&i and ACT, particularly the necessary divestiture of approximately 2,000 overlapping retail locations. This kind of restructuring is exceptionally complex and necessitates a well-thought-out strategy.

Currently, the Special Committee proposes productive collaboration with ACT to identify potential divestiture solutions early in the merger negotiation process rather than after a definitive agreement is signed. Jointly exploring paths toward resolving antitrust issues could help mitigate the inherent risks of the transaction.

The committee highlighted two potential solutions: ACT could either conduct a comprehensive divestiture of its U.S. stores or outline definitive buyers for divestiture prior to agreeing to any merger. This strategy is paramount to ensuring a clear route to maintaining competitive integrity amid market conditions.

The Nomination Committee's Role

On the executive side, the company is also in the midst of significant leadership changes, with the Board of Directors having recommended Stephen Hayes Dacus as the new President and CEO. This recommendation arises from a diligent review by the Nomination Committee, aimed at finding an ideal candidate to steer the company proficiently into the future. Mr. Dacus's extensive experience in the retail sector, combined with his bilingual capabilities and understanding of both Japanese and international markets, positions him as a valuable leader for the organization.

The Nomination Committee's exhaustive search included assessments of various internal and external candidates, ultimately identifying Mr. Dacus as the candidate best suited to fulfill the strategic goals set by the Board.

Looking Forward

As the letter emphasizes, 7&i remains steadfast in executing its strategic initiatives while simultaneously pursuing discussions with ACT. The management team believes that aligning these efforts will fortify the company's standing and drive significant shareholder value.

In conclusion, this ongoing engagement reveals 7&i's commitment to responsible governance and proactive leadership in the face of challenges. The company aims to keep all stakeholders informed as developments unfold, reaffirming its dedication to transparency and corporate responsibility.

Conclusion

This latest letter to shareholders showcases Seven & i Holdings' intention to prioritize shareholder interests while also preparing for future leadership dynamics. The ongoing dialogue between the company and ACT, alongside strategic internal changes, highlights a critical juncture for 7&i as it pursues value creation in a competitive retail landscape.