In today’s briefing:
- Seven & I Holdings (3382 JP): Uncomfortable Truths
- Nikkei 225 Index Rebalance: Positioning With a Few Days to Implementation
- 7&I (3382) – Clarifications of Clarifications But Progress Is Apparent
- Fuji Soft (9749 JP) – KKR Does Deal With the Family To Squeeze Out Minorities – You Can Join Too
- This TOB Does Not Question the Fundamental Issue of REIT Governance, but Will the Tactic Succeed?
- Golf Digest Online (3319 JP) – FY25/12 Key Initiatives for Japan and Overseas
Seven & I Holdings (3382 JP): Uncomfortable Truths
- Seven & I Holdings (3382 JP) has published two documents to respond to misinformation and detail its “constructive engagement” with Alimentation Couche-Tard (ATD CN).
- The statements underscore the Board’s serious doubts about securing US antitrust approval. The significant discrepancies in the engagement timeline point to two parties at loggerheads.
- While the Board claims it is pursuing a dual-track process to create value, the reality is that the process is designed to hinder Couche-Tard’s offer to facilitate the restructuring plan.
Nikkei 225 Index Rebalance: Positioning With a Few Days to Implementation
- BayCurrent Consulting (6532 JP) replaces Mitsubishi Logistics (9301 JP) in the Nikkei 225 (NKY INDEX) at the close of trading on 31 March.
- Since announcement, BayCurrent Consulting (6532 JP) stock is up with cumulative excess volume increasing, while Mitsubishi Logistics (9301 JP) is lower on a much bigger increase in cumulative excess volume.
- Some of the forecast adds and deletes have moved as one would expect, but positioning for the September rebalance could lead to reversals over the next few weeks and months.
7&I (3382) – Clarifications of Clarifications But Progress Is Apparent
- On 10 March, Seven & I Holdings (3382 JP) released a statement about its interactions with Alimentation Couche-Tard (ATD CN). The next day, ATD released its own. They didn’t match.
- The 7&i spokesperson admitted one technical point, but investors seemed to believe ATD over 7&i. On 13 March, ATD held a presentation in Tokyo. Materials? Unchanged. Earnings comments? Unchanged.
- This morning, 7&i released a document which “corrects the record regarding critical false and misleading claims about 7&i’s engagement with Alimentation Couche-Tard (ACT).” OUCH. The stock fell.
Fuji Soft (9749 JP) – KKR Does Deal With the Family To Squeeze Out Minorities – You Can Join Too
- KKR’s Second Tender Offer for Fuji Soft Inc (9749 JP) ended 19 February 2025 and KKR got a whopping 57.9% after Bain bowed out. It was close.
- The Nozawa founder said it would not tender. Others family members may have, but now KKR has signed a deal with Nozawa family company YK NFC, to support the squeezeout.
- Assuming, Nozawa Hiroshi’s stake and the NFC stake remain unchanged, that cements the result of the 25 April AGM. But there may be games to play.
This TOB Does Not Question the Fundamental Issue of REIT Governance, but Will the Tactic Succeed?
- Since important decisions on REIT management are made by the sponsor companies, governance isn’t functioning. That’s why REITs have been very careful to strengthen their compliance systems and information disclosure.
- For REITs that rely heavily on properties contributed by their sponsors, it is unlikely that other investors would support an activist fund’s advocacy for a change of asset manager.
- The most annoying thing for the sponsor is the change of asset manager. The tactic of this TOB is to extract shareholder returns by addressing what the sponsor company dislike.
Golf Digest Online (3319 JP) – FY25/12 Key Initiatives for Japan and Overseas
- While FY24/12 consolidated financial results paint a challenging environment, the solid achievements in GDO’s mainstay Golf Merchandise Sales business, which accounts for 34% of total consolidated net sales, should not be overlooked.
- The graph below comparing golf gear sales for one of the largest brick-and-mortar retailers ‘Co. A’ with the largest online retailer GDO highlights the success of GDO’s initiatives, GDO turning in +7.3% YoY growth versus Co. A -0.6% YoY. Co.
- A noted in its 1H FY25/6 briefing that for its Golf business (34.8% of consolidated net sales), existing store sales declined YoY, citing weak performance of golf clubs due to differences in new product launches and price reductions.
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