Loeb presses Japan’s Seven & i on succession plans
Daniel Loeb, the US activist investor, has urged the board of Seven & i Holdings to select its new chief executive based on competency rather than nepotism, citing rumours that the incumbent is looking to name his son as eventual successor.
The latest attack on the Japanese retailer comes as Third Point — the hedge fund run by Mr Loeb — has taken aim at several companies including Suzuki Motor and robotmaker Fanuc, buoyed by Prime Minister Shinzo Abe’s corporate governance reforms.
In his third letter to Seven & i dated Sunday, Third Point said the retailer faces a succession issue with Toshifumi Suzuki, the 83-year-old CEO, suffering from chronic health issues.
The fund said it was concerned by rumours that Ryuichi Isaka, president of Seven-Eleven Japan, could be removed from his position and replaced with another executive in a manoevre to enable Mr Suzuki’s son to eventually head the main convenience store business and then become group chief executive.
“We think the process of selecting the new chief executive rests with the board, not with Mr Suzuki,” Mr Loeb said in a media phone interview on Sunday, adding the choice should not be “Mr Suzuki’s handpicked successor who will in turn appoint his son.”
“This is not a dynasty but a corporation, and corporations are based on meritocracy not on dynasty,” Mr Loeb added.
Seven & i declined to comment on Third Point’s letter. But the company said it did not have imminent plans for management changes and added Mr Suzuki has fully recovered after being briefly hospitalised at the end of the year.
Third Point has not disclosed the size of its stake in Seven & i but Mr Loeb said the fund was a significant stockholder and its equity stake was worth “hundreds of millions of dollars.” Seven & i has a market capitalisation of $38bn.
He sent his first letter in late August and a subsequent one in January, where he called on the retailer to revamp its lacklustre supermarket business and pull out of acquisitions including Barney’s Japan and department store group Sogo & Seibu.
Seven & i has already announced plans to close 40 unprofitable Ito-Yokado supermarket stores over the next five years and shut down two department stores, but Mr Loeb wants it to go further.
On Sunday he said he has yet to decide whether to submit a shareholder proposal on the succession issue for the annual shareholder’s meeting in May. But in his letter, he said: “We have no wish to create a public dispute at a future Annual General Meeting but of course are willing to do so in order to protect our investment.”
Mr Loeb, known for his aggressive activist campaign, has been an active investor in Japan and a supporter of Abenomics, the equities-friendly economic policies of Mr Abe.
Last year, Mr Loeb took aim at Fanuc, successfully urging the robotmaker to make better use of its ample cash pile. It has also invested in Sony, SoftBank and heavy machinery maker IHI Corp.