Artisan Partners International Value Group Sends Letter to the Board of Seven & i

/EIN News/ -- MILWAUKEE, March 09, 2025 (GLOBE NEWSWIRE) -- The Artisan Partners International Value Group has sent the letter below to the Board of Directors of Seven & i Holdings, Inc. (the “Company”). As set forth in the letter, the Artisan International Value Group:

• contends there are many unanswered questions regarding the potential conflicts of interest with the Company’s Special Committee, Nomination Committee and the appointment of Mr. Stephen Dacus to serve as the Company’s next CEO;
• strongly encourages the Company to more deeply engage with Alimentation Couche-Tard Inc. to maximize corporate value; and
• without further disclosure regarding the membership of the Special Committee and its processes, intends to vote against Mr. Stephen Dacus, Ms. Meyumi Yamada, Mr. Yoshiyuki Izawa, Mr. Toshiro Yonemura and Mr. Junro Ito.
  

The full text of the letter is as follows:

March 9, 2025

The Board of Directors
Seven & i Holdings Co. Ltd.
8-8, Nibancho, Chiyoda-ku
Tokyo 102-8452, Japan

To the Members of the Board:

We represent the Artisan International Value Group, a U.S. dollar (“USD”) 45 billion long-term value investing platform. We have been shareholders of Seven & i Holdings Co. Ltd. (“SIH” or the “Company”) since July 2019. As a signatory to Japan’s Stewardship Code, we are committed to promoting sustainable growth of companies through investment and dialogue. We are writing to help the Company achieve its goal of becoming a “world-class retail group” and to enhance corporate value.

Proper corporate governance is a prerequisite to enhancing corporate value. In the process of evaluating the future of the Company, the Board has taken several decisions that leave significant unanswered questions. Those questions revolve around potential conflicts of interest and failure to pursue the path that offers the best future for the Company and maximizes value. In short, we believe the Board of Directors has fallen short of acceptable global corporate governance practices and it is in the interest of shareholders and other stakeholders to address this issue directly to the Company’s leadership.

There are serious questions surrounding the role of Mr. Stephen Dacus as Chairman of the Special Committee, in light of the Nomination Committee’s selection of Mr. Dacus to be the Company’s next CEO. Notably, Mr. Dacus served as a member of the Nomination Committee while his own role at the Company was under consideration. Clearly, minimum corporate governance standards would have demanded Mr. Dacus resign from both of these committees while there are active bids for the Company and while there was a succession process in place.

As a result, shareholders can have no confidence that the Special Committee has run, nor continues to run, a thorough evaluation process.

Shareholders and the Board find themselves in an uncomfortable position. Mr. Dacus and the Special Committee determined that the initial offer from Alimentation Couche-Tard Inc. (“ACT”) of USD14.86 per share “grossly” undervalued the Company. Yet the Company’s recent decisions under the leadership of the Chairman of the Board of Directors, Chairman of the Special Committee and Chairman of the Nomination Committee have brought the Company’s share price back down to USD14.18 per share as of the Japanese market close on March 7, 2025, or roughly 22% below ACT’s latest offer of USD18.19 per share, a price not materially different from the share price one year ago when none of these Board decisions had been announced.

The Special Committee did not take the opportunity to dispel entrenchment concerns by revealing the identities of the Special Committee members, or the process by which they were selected, as requested in our letter dated October 15, 2024. We addressed an additional letter to the Board dated March 5, 2025, outlining our concerns about the potential conflicts of interest with Mr. Dacus’ role as Chairman of the Special Committee, noting that between the receipt of the initial takeover offer from ACT in August 2024 and the point at which it became widely publicized that Mr. Dacus would be named to succeed Mr. Ryuichi Isaka as the Company’s next CEO, Mr. Dacus had not stepped down as Chairman of the Special Committee.

The process by which the members of the Special Committee were selected, including the appointment of Paul Yonamine to be the next Chairman, remains unknown, as are Mr. Yonamine’s qualifications to serve as Chairman. It is unclear if anyone on the Special Committee besides Mr. Dacus has engaged with ACT, or whether Mr. Dacus engaged with ACT in good faith to adequately consider ACT’s bona fide, premium offer.

Given the course of events, shareholder questions to management, the directors and the auditors of the Company demand a thorough response. Further, given the Company’s poor performance in North America, we as shareholders again encourage the Special Committee to fully and meaningfully engage with ACT, a company with a proven track record of operating excellence. In addition, the Board should appoint a shareholder-recommended candidate to serve as Chairman of the Special Committee. By taking these actions, the Board will finally give shareholders reason to believe the ACT offer is being considered and evaluated in good faith.

Given the outlined potential conflicts of interest and the poor performance of the Company, including significant restructuring and the forced sale of loss-making operations after years of squandered investment, we see no reason why other stakeholders such as employees and franchisees should have confidence in current leadership. It is clear the Board does not have a shareholder or a stakeholder mandate.

Pending your responses to these urgent inquiries and without further disclosure with respect to the membership of the Special Committee, we will have no choice but to vote against Mr. Stephen Dacus at the Company’s upcoming annual general meeting of shareholders (“AGM”), as well as against each of the other members of the Nomination Committee: Ms. Meyumi Yamada, Mr. Yoshiyuki Izawa and Mr. Toshiro Yonemura. In addition, given his inability to consummate the Ito-Kogyo takeover offer and the enormous distraction this created for the Company and the Special Committee, we also intend to vote against Mr. Junro Ito at the upcoming AGM.

Sincerely,

N. David Samra		Benjamin L. Herrick
Portfolio Manager		Associate Portfolio Manager

Press Inquiries
Eileen Kwei
800.399.1770
eileen.kwei@artisanpartners.com