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Dan Loeb takes on Japan's convenience store giant

By NexChange
Hedge Funds

Dan Loeb’s Third Point has just bought an activist stake in Seven & I Holdings, the Japanese retail giant behind the 7-eleven convenience store franchise and other retail operations including Sogo and Seibu department stores.

According  to Reuters, sources says Third Point wants Seven & I to downsize its general merchandise business to improve profitability, and as taken a less than 5% stake to pressurize it into doing so.  

The firm is actually not doing too shabby – Seven & I’s  convenience store business in Japan and the U.S. yielded a record operating profit for the March-August half – but Ito-Yokado, its general merchandise chain, dragged it down by makring down a 9 billion yen ($73.6 million) loss for the same period.

For now, Seven & I has kept quiet on the deal but Loeb could have a fight on his hands, Japan does not react well to activist investors especially when they come from overseas. Many outside investors have struggled to crack open Japan notoriously conservative corporate giants.

But Loeb's track record indicates that he is up to the job, with Third Point previously taking positions in Sony Corp, Suzuki Motors, and robot maker Fanuc Corp and has successfully pushed for reforms.

Either way, investors have reacted well. Seven & I saw its stock jump 3.7% when the news first broke yesterday.
Photo: Mike Mozart

 

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