The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Hudson Lockett

TOKYO, May 30 (Reuters Breakingviews) - Seven & i 3382.T can breathe a sigh of relief, if only a partial one. Shareholders at the Japanese company's annual meeting this week warmly supported management proposals and four new board members, including the confirmation of Stephen Dacus as the group’s first foreign chief executive.

A detailed breakdown of the vote published on Thursday showed notable dissent only for a founding family clan member whose attempt to take Seven & i private to ward off Canadian suitor Alimentation Couche-Tard ATD.TO failed. Junro Ito won 89% approval, down more than 8 percentage points from a year ago.

Overall, the vote is an endorsement of actions the $39 billion company is taking, under duress, to shore up its position as a standalone company after years of underperformance.

The convenience store owner's promises so far include: a 2 trillion yen ($13.9 billion) buyback over the next five years funded in part by the agreed 815 billion yen sale of the group’s supermarket business, York Holdings, to Bain Capital; and a future stock market listing of its North American convenience store unit for at least 1 trillion yen.

The result of the vote and absence of shareholder proposals against the company do not equate to full-throated confidence in Seven & i, however. Its shares have fallen about 12% this year despite signing a non-disclosure agreement giving Couche-Tard access to financial data, and the stock is trading roughly 17% below the Couche-Tard's most recent non-binding offer.

In fact, Seven & i's overhaul will only bring the underperformance of its U.S. convenience store business into a clearer light and invite unflattering comparisons with the more profitable Circle-K stores run by its suitor. The Japanese company's prize asset might be worth almost $39 billion on Breakingviews calculations using Couche-Tard's 10 times multiple of EBITDA.

Seven & i has struggled to turn the unit around since acquiring nearly 4,000 Speedway stores from Marathon Petroleum MPC.N in 2021. Here Dacus’ plan falls short. It amounts to doubling down on his predecessor's strategy to add more “quick service restaurants”, which have helped boost returns at about 1,000 stores. Last month he told Bloomberg that Seven & i could add the feature to another 1,200 shops, but that is only a fraction of the more than 13,000 stores it runs in North America.

The vote has given Seven & i some breathing room. However, Couche-Tard knows it is the only remaining bidder for the company and appears ready to bide its time.

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CONTEXT NEWS

Japan's Seven & i held its annual general meeting on May 27.

(Editing by Una Galani; Production by Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on LOCKETT/ hudson.lockett@thomsonreuters.com))