Seven & I Holdings: Mega Share Buyback Plan and IPO of North American CVS Unit to Boost Share Price

• If indeed the company proceeds with 2 trillion yen buyback over five years, this would represent buyback of about 7.3% of its shares per year (37% of market cap).

• Seven & I Holdings' plans to massively buyback shares and IPO its North American CVS business are major catalysts that should have positive impact both near and long term.

• Certainly, the company's action plan to sell its non-core assets (including supermarket, restaurant, and specialty stores) to Bain Capital for $5.5 billion is a step in the right direction.

Conclusion First

Seven & I Holdings (3382 JP)'s plans to massively buyback shares (2 trillion yen, $13.5 billion) and IPO its North American CVS business are positive catalysts that should have both near-term and long-term positive impact on the company's share price.

Actions speak louder than words only. Certainly, the company's action plan to sell its non-core assets (including supermarket, restaurant, and specialty stores) to Bain Capital for $5.5 billion is a step in the right direction.

In addition, the valuations of the publicly listed North American CVS operators are much higher than Seven & I Holdings' current valuations. Thus, the IPO of the company's North American CVS operation could further boost its value.

With regards to trading, we believe Seven & I Holdings' share price could retrace its recent ceiling level (about 2,400 yen) in the next several weeks. As the new CEO Stephen Dacus takes helm of the company starting May, there could be further positive action plans which could boost share price of Seven & I Holdings even further.