Sevent & i Holdings (3382): Decision not to invest in Zabka Group announced; direction of domestic capital alliance strategy now the point to watch

Research evidence excerpt

Sevent & i Holdings (3382): Decision not to invest in Zabka Group announced; direction of domestic capital alliance strategy now the point to watch

tsui Card, with

the companies then collaborating in such areas as customer data. On July 24, the Nikkei

reported that Seven & i is likely to announce its investment and collaboration plans as

early as the end of July. Management is likely to discuss such matters as the integration

of PayPay’s 74 million registered users with the 39 million registered users of Seven &

i’s 7iD service, as well as the construction and utilization of the resulting database, which

will involve over 1 million sets of customer data. Attention is also likely to focus on

management’s discussion of how Seven & i intends to generate synergies sufficient to

offset the share dilution (which we estimate at 6.4%) and how SoftBank, PayPay, and

Sumitomo Mitsui Card will get a sufficient return on their investment.

• After reports of a possible Zabka acquisition emerged on July 17, there was speculation

among equity investors that Seven & i would raise roughly ¥300 billion by issuing new

shares and use this to acquire Zabka. Now that Seven & i’s July 25 announcement has

ruled out this possibility, the focus is on what management says about the appropriateness

of this fundraising method and the deployment of funds. Of particular note, the

company’s medium-term plan outlines a total of around ¥2.8 trillion in shareholder

returns over the five years through FY3030, comprising ¥0.8 trillion in dividends and

¥2.0 trillion in share buybacks (of which, ¥0.6 trillion were carried out in FY2025). There

appears to be a contradiction between the company’s plans to provide a high level of

shareholder returns and its raising of funds through the issuance of new shares.