(Bloomberg) -- A special committee of Seven & i Holdings Co.’s board is still considering takeover proposals by Alimentation Couche-Tard Inc. and the founding Ito family, although it doesn’t have enough information to evaluate them, Chief Financial Officer Yoshimichi Maruyama said.
“We are considering all options, and whether they are feasible,” Maruyama said after the Japanese operator of 7-Eleven stores reported quarterly results Thursday. “Both proposals have hurdles to make an acquisition possible. We haven’t received details of those solutions, so the ball is on the side of those proposing buyouts.”
Seven & i has been caught up in takeover speculation since Canada’s Couche-Tard’s interest in buying the company at a price currently indicated at around ¥7.5 trillion became public. Since then, the retailer has embraced a radical plan to fend off the approach by embarking on a separation of its domestic supermarkets and retail business in order to focus on its convenience-store operations.
Its founding family has teamed up with Itochu Corp. for a competing ¥9 trillion management buyout proposal, in order to trump the Circle K operator’s bid. That has raised the stakes for a company that has become a symbol of efforts to unlock value from staid Japanese corporations.
Seven & i’s operating profit declined 24% in the latest quarter on broader retail weakness despite some signs of recovery at its convenience stores in Japan and North America. Profit was ¥128.4 billion during the period that ended in November, compared with ¥169 billion a year earlier. Analysts were projecting, on average, profit of ¥132 billion. Sales came in flat at ¥3.03 trillion yen.
The mixed results could make it harder to stave off investor pressure to engage with the takeover proposals. Seven & i’s management will decide what the best course of action will be, with an eye toward the shareholders’ meeting in May, the CFO said.
In the US, where it gets half of its profits, monthly in-store sales rose slightly in November for the first time in 14 months, the company said last month. In Japan, sales also advanced after promoting lower-priced products.
Seven & i’s stock is up almost 50% from an August low, spurred on by the takeover proposals. Still, reflecting some uncertainty about the offers and the retailer’s restructuring plan, its currently market valuation still hovers at around ¥6.2 trillion.
For the full fiscal year that ends in February, Seven & i kept its forecast for operating profit of ¥403 billion, as well as its outlook for ¥11.9 trillion in sales.
The third-quarter results may not have much impact on the shares, as the market is focused on the outcome of the company’s plans to split and development of the proposals, said Lorraine Tan, an equities analyst at Morningstar Asia Ltd., adding that restructuring “remains the main driver.”
(Updates throughout with CFO comments.)
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