By Anton Bridge

TOKYO (Reuters)

Japan's Seven & i will seek to persuade shareholders about its long-term growth potential during an investor meeting on Thursday. This follows the announcement of a comprehensive break-up plan aimed at countering a $47 billion takeover bid.

The owner of 7-Eleven is set to hold an "investor day" briefing with analysts and investors, addressing questions regarding its global and domestic convenience store operations.

Seven & i is striving for independence after Canada's Alimentation Couche-Tard disclosed a preliminary bid in August. The Circle-K owner has since raised its bid by 22% to approximately $47 billion, marking it as potentially the largest overseas acquisition of a Japanese company.

While the Japanese 7-Eleven stores are profitable, Seven & i has struggled due to underperformance in its supermarkets, particularly with Ito Yokado stores, which are a vital part of the company's long-standing structure. Some foreign shareholders have long advocated for a separation of the business segments.

Seven & i has expressed confidence in its ability to enhance shareholder value independently. In their restructuring plan announced earlier this month, they intend to isolate the supermarket sector and about 30 other non-core units into a separate holding company. Market reaction has been lackluster, with the company’s shares showing little movement after the plan was disclosed.

One investor, U.S. fund Artisan Partners (NYSE:APAM), criticized the initiative as "too little, too late," encouraging Seven & i to engage with Couche-Tard.

"The Couche-Tard offer amplifies the fact that investors may want to be able to cash out of their 7-Eleven shares now instead of banking on an uncertain time frame to see value surface," said Lorraine Tan, director of equity research for Asia at Morningstar.

"While 7-Eleven's plan to spin off non-core businesses is helpful, this initial step doesn't move the needle much."

Tan noted she is particularly focused on how 7-Eleven plans to reduce its selling, general and administrative (SGA) expenses, especially in its U.S. operations.

While 7-Eleven stores are highly profitable in Japan—boasting a 27% operating margin—this is not reflected in international markets, where the margin sits at merely 3.5%.

Of 7-Eleven's 85,000 worldwide stores, around 21,000 are in Japan, most of which are franchises. Originally an import, 7-Eleven has become a cultural mainstay in Japan, known for its extensive array of fresh food and everyday items ranging from toothpaste to socks.

Analysts believe the success of the restructuring will depend heavily on 7-Eleven's capability to launch a new store format domestically, cut expenses, and improve margins abroad.
Plans have been made to close approximately 444 underperforming stores overseas, while also enhancing fresh food offerings in the United States.