Unlock Editor’s Digest for free

Roula Khalaf, editor of the FT, picks her favorite stories in this weekly newsletter.

Seven & i Holdings plans to separate its convenience store operations from non-core businesses as the Japanese retailer faces an unsolicited $47 billion takeover bid from Alimentation Couche-Tard.

The 7-Eleven owner said Thursday that it would separate 31 subsidiaries – including supermarkets such as Ito-Yokado, specialty stores and the Denny’s restaurant brand – and put them into a new holding company called York Holdings.

The group then plans to bring in external investors and prepare for a possible stock market listing, while retaining a minority stake.

The company’s financial arm, Seven Bank, is also being spun off from the convenience store empire as Seven & i works to streamline its operations and increase its shareholder value.

The rest of the company – its convenience store empire in Japan, the US and the rest of the world – has been temporarily renamed 7-Eleven Corporation. The name change will be confirmed after a shareholders meeting in May.

With the restructuring, Seven & i is trying to prove to investors that the company can increase its valuation and fend off a takeover proposal from Canadian company Couche-Tard.

“We can further strengthen the convenience store business.” . . And alongside growth, capital efficiency must also be considered when running the business. I think this will actually create more value than what Couche-Tard proposed,” said Ryuichi Isaka, CEO of Seven & i.

Seven & i, which operates 85,800 stores worldwide, has long been under pressure from activist shareholders, including San Francisco-based ValueAct Capital, to increase its valuation and focus on its convenience store business.

That pressure has intensified since the group quickly rejected Couche-Tard’s $39 billion inaugural offer in September, saying it “grossly” undervalues ​​the company and the difficulty of getting a deal done Getting past US competition regulators is not taken into account.

Couche-Tard, which operates the Circle-K brand, recently told the Japanese company it would be willing to pay 20 percent more, or nearly $47 billion, according to people familiar with the matter.

On Wednesday, Seven & i confirmed “that it has received a revised confidential, private and non-binding offer” and will “continue to act in the best interests of its shareholders”.

According to four Seven & i investors, the new proposal has “cleared the valuation hurdle”.

“I would be disappointed if Seven didn’t take this offer seriously,” said a major shareholder. “I want them to negotiate and deal with this properly, just as they have done so far.”

Seven & i’s share price has risen 30 percent since the initial Couche-Tard offer in August. But at ¥2,325 ($16) per share, it’s still below the Canadian company’s last offer.

If approved, the takeover of Couche-Tard would be the largest in Japan by a foreign company and a sign that corporate governance reforms are gaining traction in the country.

The announcements on Thursday came as Seven & i cut its operating profit forecast for the full year ending in February to ¥403 billion from ¥545 billion as inflation continues to weigh on its U.S. convenience store business.

The group also said its second-quarter operating profit was 127.7 billion yen, down 20 percent from the same period last year and missing analyst estimates of 144 billion yen, according to LSEG data.