By Svea Herbst-Bayliss

NEW YORK (Reuters) – ValueAct Capital is pushing Seven & i Holdings to elucidate its company technique to shareholders together with why it’s not spinning off of its 7-Eleven comfort retailer chain or contemplating promoting the entire firm.

The funding agency, which owns a 4.4% stake and has been pushing for change since 2020, is ratcheting up stress earlier than the corporate’s April 6 earnings name and the annual assembly the place it seeks to interchange 4 board members.

“We’ve been unable to determine confidence within the administration or governance of Seven & i,” ValueAct wrote in a letter to the corporate’s board dated April 2, including current communication heightened concern about “entrenchment.”

The funding agency, which has a monitor report of investments in Japan and has board seats at Olympus Corp and JSR Corp, has prompt a tax-free spin off of 7-Eleven or perhaps a sale of all the firm.

A consultant for the corporate was not instantly obtainable for remark and ValueAct declined additional remark past the letter.

Final month Seven & i signaled a “continuation of its establishment conglomerate construction,” which confused and disillusioned markets, the letter mentioned.

Now ValueAct desires solutions to 9 key questions when the corporate experiences earnings this week.

Does the board perceive how irritating the conglomerate construction is to shareholders and has it evaluated the conglomerate low cost, the funding agency requested.

And it desires to solutions to which strategic options had been thought-about and why the corporate has not pushed forward with a tax-free spin-off of 7-Eleven, one thing ValueAct had referred to as on the corporate’s administration to do in January.

The spin-off might be accomplished by way of an inventory on the Tokyo Inventory Trade in roughly a yr, ValueAct mentioned earlier.

It additionally desires to know why the corporate shouldn’t be placing itself up on the market and whether or not the board is conscious of any takeover approaches for Seven & i within the final 5 years.

Seven & i mentioned in March that it’ll shut a further 14 Ito-Yokado grocery store shops in Japan and absolutely exit its attire enterprise as a part of a structural reform plan.

ValueAct’s newest letter underpins its effort to interchange 4 board members on the corporate’s 14-member board with 4 director candidates that it has not recognized publicly.