Seven & i Discuss Nissen Buyout, Lifting Unit’s Shares to Limit

  • Company to discuss making loss-making unit wholly owned
  • Seven & i plans to delist Nissen this year: person familiar

Nissen Holdings Co. shares surged by their trading limit in Tokyo as parent Seven & i Holdings Co. said its board would discuss buying out the loss-making mail-order retail unit amid a broader restructuring.

Seven & i plans to take full control of Nissen and delist it from the Tokyo bourse as soon as this year, a person with knowledge of the matter said, asking not to be identified as the information is private. The move is part of the retailer’s efforts to restructure non-core and less-profitable businesses, according to the person. Nissen rose 31 percent to 126 yen, the most intraday since 2001, while Seven & i fell as much as 1.6 percent.

Seven & i president Ryuichi Isaka, installed May 26 after a boardroom tussle with his former boss, planned to announce a growth strategy and structural reform plan 100 days from taking office. Billionaire activist investor Dan Loeb has called for it to restructure general-merchandise unit Ito-Yokado Co. and divest retailers Nissen, Sogo & Seibu and Barney’s Japan.

The retailer will also discuss at the Tuesday board meeting the possible closure of two Seibu department stores in Japan, which could be shut by February next year, another person with knowledge of the matter said. The company plans to disclose the results of the meeting later Tuesday in Tokyo, the person said.

“Making Nissen a wholly-owned company is in discussion. It is a topic for the board meeting this afternoon,” said Yuki Toda, spokesman for Seven & i, the world’s largest convenience store operator, by telephone on Tuesday. “We will make announcements as soon as we make our decision.”

Outdated Business

Nissen’s shares have plunged 47 percent so far this year through Monday, while its parent dropped 23 percent over the same period, under-performing the Topix index’s 15 percent decline.

Seven & i owns a 50.74 percent stake in Nissen, which sells clothing, household goods, jewelry, and kimonos by mail. Nissen has seen its losses deepen yearly since 2013 as it struggled to compete with the proliferation of online retailers. It reported a net loss of 13.3 billion yen for the year to Dec. 2015.

“Nissen’s way of business is out of date in this e-commerce competitive era,” said Dairo Murata, an analyst at JPMorgan Securities Japan Co, by telephone. “Seven & i originally acquired Nissen for its omni-channel strategy, but there’s too much write down from the business now.”

Nissen is likely to “use all its resources” to restructure the business from the ground up, Murata said.

The Nikkei newspaper reported earlier Tuesday Seven & i plans to delist Nissen by the end of this year and is considering shuttering two Seibu department stores, without saying where it got the information.

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