The flagship Sogo & Seibu Co. store in central Tokyo shut on Thursday as employees went on strike, following through on their pledge to stop work should Seven & i Holdings Co. go ahead with selling the department store chain to Fortress Investment Group.
“We sincerely apologize for the inconvenience this may cause to our customers, local residents, business partners, employees, and other stakeholders,” Seven & I said in a statement. “Sogo & Seibu management will continue to engage in discussions with the labor union regarding its business continuity and employment.”
The rare case of industrial action in Japan comes ahead of a board meeting, at which the convenience-store operator will agree to sell Sogo & Seibu on Friday and forgive around ¥90 billion ($616 million) of the roughly ¥160 billion it has lent to the unit, the Nikkei newspaper reported, without saying how it obtained the information. The company will work to retain workers after it completes the sale, it said.
The sale has been months in the making. Seven & i announced in November that it had secured a deal to sell Sogo & Seibu to Fortress for an enterprise value of about ¥250 billion. But negotiations stalled after its labor union expressed concerns about the retention of workers and said it was considering a strike, while separately the chain’s retirees sued Seven & i, saying the sale price was too low.
After missing a February deadline, Seven & i is now looking to complete the deal as soon as September for an enterprise value of about ¥210 billion, Bloomberg News reported last month.
Another point of contention for Sogo & Seibu workers is Fortress’ plans to team up with Japanese electronics and appliances retailer Yodobashi Holdings Inc., with local media reporting the union is concerned about how existing floor space can accommodate Yodobashi.
The sale comes as activist investors including ValueAct Capital Management are pushing Seven & i to maximize profitability and shareholder value by focusing on its 7-Eleven stores and shedding less profitable business.
Seven & i, which operates about 85,000 stores globally, has said it will focus more on its core food and convenience-store operations. Chief Executive Officer Ryuichi Isaka was reelected as a director to lead the company in May, winning a showdown with ValueAct, which had sought to replace him and place its own candidates on the board.