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ValueAct Capital Partners has taken a large stake in Japanese retailer Seven & i Holdings and is reportedly pushing for changes, including a breakup.

Reuters reported Wednesday that ValueAct acquired a $1.53 billion stake in Seven & i, representing 4.4% of outstanding stock. In a letter to investors seen by Reuters, the activist hedge fund led by Mason Morfit said the sum of the company’s parts is worth much more than its current market capitalization.

In particular, ValueAct noted that the company’s 7-Eleven convenience stores generate high returns, while its other businesses like real estate are a drag to valuation. “We invested in Seven & i Holdings at an estimated P/E ratio of 11 times, while global peers trade at 15 times to 25 times,” ValueAct wrote in the letter.

ValueAct said in the letter that it has been engaging with the company’s board and management in recent months and is “optimistic” it can build trust and alignment with the company.

ValueAct’s thesis might have supporters among the company’s shareholders. Third Avenue Management revealed at the end of 2020 that it took a stake in the Japanese retailer, advancing a similar thesis. “It is our view that if the U.S. 7-Eleven business were to be valued independently at a multiple similar to publicly-listed comparable companies, the undervaluation of Seven & i would become glaringly clear,” Third Avenue Value Fund portfolio manager Matthew Fine wrote in a letter to investors.

ValueAct has been stepping up its activity in Japan in recent years, applying a similar tactic of amicable engagement that it is known for in the U.S. ValueAct Partner Robert Hale joined the board of camera maker Olympus in 2019 and rubber producer JSR in 2021. In 2020, the activist invested in video game company Nintendo.

Seven & i is ValueAct’s second activist investment this year after in early March it revealed a 6.2% stake in Germany-based advertising agency Stroeer.

Japan was the second-busiest market last year after the U.S., with 65 companies subjected to activist demands, according to Activist Insight Online. So far this year, 26 companies have been targeted, one less than the same period in 2020. A proxy contest at Toshiba was among the most high-profile cases of activism this year.