7-Eleven's parent company reduces full-year earnings expectations while continuing with restructuring plans.

• Seven & i Holdings reduced its earnings projections for the fiscal year ending February 2025.
• The owner of 7-Eleven stores announced plans to establish an intermediate holding company for its supermarket food business, specialty store, and other businesses, in response to increasing pressure from investors to streamline its large business portfolio.

The Japanese convenience retailer reduced its earnings projections and proceeded with restructuring plans, which entail separating non-core businesses into a separate subsidiary.

The company has lowered its profit forecast for the fiscal year ending February 2025, now expecting net income of 163 billion yen ($1.09 billion), a 44.4% reduction from its previous forecast of 293 billion yen. This reduction is due to the company reporting first-half net profit of 52.24 billion yen on 6.04 trillion yen in revenue, despite sales coming in higher than forecast. However, profits were significantly below its own guidance for 111 billion yen.

The company recorded a charge of 45.88 billion yen related to its spin-off of Ito-Yokado Online Supermarket, while it saw fewer customers at its overseas convenience stores due to a "more prudent approach to consumption."

The owner of 7-Eleven announced plans to establish an intermediate holding company for its supermarket food business, specialty store, and other businesses, in response to mounting pressure from investors to streamline its portfolio.

The Japanese retail group resists a takeover attempt by Canada's retail group, which would consolidate 31 units.

In September, Seven & i turned down the initial takeover offer of $14.86 per share, stating that the bid was not in the best interest of its shareholders and stakeholders and also raised U.S. antitrust concerns.

In Japan, foreign entities must notify the government and undergo a national security review if they acquire a 1% stake or more in a designated company under the Foreign Exchange and Foreign Trade Act. After receiving that proposal, Seven & i obtained a new designation as "core business" in Japan.

Revised offer

On Wednesday, Seven & i confirmed receiving a revised bid from ACT, but did not disclose further details. Bloomberg previously reported that the Canadian operator of Circle-K stores had raised its offer by around 20% to $18.19 per share, valuing Seven and i at 7 trillion Japanese yen. If finalized, the deal could become the biggest-ever foreign takeover of a Japanese company.

It's possible that ACT's buyout bid could become a hostile takeover attempt, according to Nicholas Smith, a Japan strategist at CLSA, who stated this on CNBC's "Squawk Box Asia" on Thursday.

In recent years, Japan has faced numerous issues with poison pills, and the legal framework is complex. To deter acquirers, companies may employ a "poison pill" strategy by issuing extra stock options, thereby diluting the attempted acquisition's share.

According to Jamie Halse, founder and managing director of Senjin Capital, it is unlikely that a hostile tender offer would be made, as no banks would provide the necessary financing.

If the offer becomes sufficiently attractive, it may be challenging for the board to reject it.

"An activist investor may use the frustration of shareholders over the lack of negotiations to effect a change in the board's composition."

As of Thursday close, seven & i shares were traded at 2,325 Japanese yen. Since August, when the Canadian company's buyout interest became public, the Tokyo-listed shares have surged over 33%.

Seven & i Holdings has significantly more stores than ACT, with approximately 85,800 stores compared to ACT's 16,800 stores globally.

The revised offer implies that ACT leaders are "dedicated," according to Jesper Koll, head of Japan at Monex Group, who stated this via email to CNBC. Additionally, he highlighted that the new offer price represents a 53% premium above the pre-offer share trading price.

"Although the money is good, there is more to consider than just the figures," Koll stated.

"According to Amir Anvarzadeh, a Japan equity market strategist at Asymmetric Advisors, Seven & i management is under pressure to demonstrate their ability to accelerate their operations while maintaining independence."