U.S. fund Artisan Partners Asset Management ramped up pressure on Japan's Seven and i Holdings, urging the retailer's board to provide an update on a takeover bid from Canada's Alimentation Couche-Tard (ACT) by 19 September.
In a letter sent to journalists, Artisan portfolio managers N. David Samra and Benjamin L. Herrick recommended that Seven & i, operator of the 7-Eleven convenience store chain, seriously consider ACT's offer and solicit offers for the company's Japanese subsidiaries "as quickly as possible."
'Corporate Value'
"ACT is uniquely positioned to enhance (Seven & i's) corporate value," Samra and Herrick wrote.
"Negotiating with ACT is the best tactic to preserve positive stakeholder outcomes in Japan," they said. "It is imperative that the board of directors negotiate with ACT immediately to achieve the best possible outcome for shareholders."
Phone calls to Seven & i were unanswered on Saturday. The company has said it does not comment on individual shareholders.
Artisan's letter, highly critical of Seven & i's record of enhancing corporate value, highlights the pressure on the company from shareholders over the potential deal, which would likely be the biggest-ever overseas buyout of a Japanese firm.
ACT, the owner of Circle-K convenience stores, last week said it had approached Seven & i about a possible acquisition, without disclosing a potential deal value.
Artisan has been a critic of Seven & i's management and structure since 2019, when, according to the letter, it became a shareholder. It said it is an active - not activist - shareholder, which engages with corporate management and boards.
The fund said its Sept. 19 deadline for an update was set based on the bid coming to light on Aug. 19.
'Friendly Proposal'
At that time, Seven & i said ACT had proposed buying all outstanding shares of the company. ACT said it had sent the retailer a "friendly proposal" and was focussed on reaching a mutually agreeable transaction.
Artisan said Seven & i's "lack of official communication" so far, along with "rumours" that the company may be seeking a special designation to impede a takeover, were "troubling".
Bloomberg News reported this week that Seven & i was seeking designation as a "core" company in Japan, which would require the finance ministry to thoroughly investigate any entity that seeks to acquire more than 10% of its shares.
Allowing that to happen would run contrary to the government's recent push to improve corporate governance in Japan, which had helped lure overseas money into the local stock market, powering it to record highs this year.
"Government intervention would signal Japan Inc. is not prepared to stand behind these relatively new, yet globally competitive measures to improve asset efficiency," Artisan's letter said. "Shareholders deserve a fair and independent process."
Artisan Partners holds 0.85% of Seven & i's outstanding shares, LSEG data showed.
Read More: Possible Seven & i Takeover Would Be 'Historic' For Corporate Japan
