Poison pills will hurt Seven & i and Japan
The authors are Reuters Breakingviews columnists. The opinions expressed are their own. Updates to add graphic and rephrases second paragraph.
By Una Galani and Anshuman Daga
MUMBAI, Aug 28 (Reuters Breakingviews) -An iconic company appears to be failing an acid test on Japan Inc reforms. Seven & i 3382.T is seeking a higher level of government protection barely a week after the $38 billion company confirmed Canada's Alimentation Couche-Tard ATD.TO had made a preliminary takeover offer. It's a reflex reaction that an administration trying to shake off three decades of stagnation and promote economic growth needs to avoid.
There are many reasons Tokyo should resist granting this poison pill of sorts. The owner of 7-Eleven convenience stores wants a status that would require any entity taking a more than 10% stake in the company to notify the government beforehand, Bloomberg reported on Tuesday citing unnamed sources. That would effectively prevent a dawn raid on its shares.
The most-protected status is assigned to a wide range of more obviously sensitive companies including Toyota Motor 7203.T, SoftBank Group 9984.T and chipmakers Tokyo Electron and Renesas Electronics 6723.T, per a list updated in 2021. The designation requires a buyer to make greater disclosures but doesn't necessarily prevent a foreign takeover. IT specialist Fuji Soft 9749.T has it and is under a tender offer from U.S. private equity firm KKR KKR.N, for example. Awarding the status, especially after a bidder has already shown interest, would, however, take some fairness and heat out of a value-creation process for a badly underperforming company. It also would be hard to justify putting a retail company in that category.
Japan's foreign investment regime is supposed to offer buyers predictability about the process they will face. Tokyo would in any event need to clear a deal if one is agreed. Acting earlier than it needs to would undermine the drive by the Minister of Trade, Economy and Industry to force companies to focus on shareholder returns and properly consider bona fide offers. Other Japanese companies are, by contrast, starting to shed variousM&A defences.
Ultimately, fewer bidders for Seven & i may emerge if the government changes the company's status while it is in play. Japanese trading giants have been doubling down on food businesses as they seek to reduce their heavy exposure to commodities. Mitsui for example, already owns 2% of the target. Itochu 8001.T in 2020 acquired FamilyMart, a rival Japanese convenience store franchise, while telecoms carrier KDDI 9433.T took private another, Lawson, this year. Yet it was an approach from an outsider, Couche-Tard, that has givenSeven & i's shares an 18% bump, and multiple bankers have told Breakingviews that foreign private equity firms are now sizing up the opportunity.
The best course for the government is to ignore Seven & i's request, wait on the sidelines and ensure a fair process.
Follow @ugalani and @anshumandaga on X
CONTEXT NEWS
Seven & i wants the Japanese government to require prior notification of any purchase of its shares above 10%, Bloomberg News reported on Aug. 27, citing people familiar with the matter.
The Japanese operator of 7-Eleven stores has applied to upgrade its "non-core" company status to "core" under the Foreign Exchange and Foreign Trade Act, it added.
The company's shares fell 2% in early trade on Aug. 28 to 2,080 yen, 18% above their price on Aug. 16, the last trading day before it confirmed a preliminary takeover offer from Canada's Alimentation Couche-Tard.
Graphic: Seven & i's share ownership is fragmented https://reut.rs/3XmJG0m
Editing by Antony Currie, Ujjaini Dutta and Aditya Srivastav
면책조항: XM Group 회사는 체결 전용 서비스와 온라인 거래 플랫폼에 대한 접근을 제공하여, 개인이 웹사이트에서 또는 웹사이트를 통해 이용 가능한 콘텐츠를 보거나 사용할 수 있도록 허용합니다. 이에 대해 변경하거나 확장할 의도는 없습니다. 이러한 접근 및 사용에는 다음 사항이 항상 적용됩니다: (i) 이용 약관, (ii) 위험 경고, (iii) 완전 면책조항. 따라서, 이러한 콘텐츠는 일반적인 정보에 불과합니다. 특히, 온라인 거래 플랫폼의 콘텐츠는 금융 시장에서의 거래에 대한 권유나 제안이 아닙니다. 금융 시장에서의 거래는 자본에 상당한 위험을 수반합니다.
온라인 거래 플랫폼에 공개된 모든 자료는 교육/정보 목적으로만 제공되며, 금융, 투자세 또는 거래 조언 및 권고, 거래 가격 기록, 금융 상품 또는 원치 않는 금융 프로모션의 거래 제안 또는 권유를 포함하지 않으며, 포함해서도 안됩니다.
이 웹사이트에 포함된 모든 의견, 뉴스, 리서치, 분석, 가격, 기타 정보 또는 제3자 사이트에 대한 링크와 같이 XM이 준비하는 콘텐츠 뿐만 아니라, 제3자 콘텐츠는 일반 시장 논평으로서 "현재" 기준으로 제공되며, 투자 조언으로 여겨지지 않습니다. 모든 콘텐츠가 투자 리서치로 해석되는 경우, 투자 리서치의 독립성을 촉진하기 위해 고안된 법적 요건에 따라 콘텐츠가 의도되지 않았으며, 준비되지 않았다는 점을 인지하고 동의해야 합니다. 따라서, 관련 법률 및 규정에 따른 마케팅 커뮤니케이션이라고 간주됩니다. 여기에서 접근할 수 있는 앞서 언급한 정보에 대한 비독립 투자 리서치 및 위험 경고 알림을 읽고, 이해하시기 바랍니다.
