TOKYO (Reuters) – Shares of Seven & i Holdings surged to a two-year high on Thursday after Reuters reported activist investor ValueAct Capital took a stake in the Japanese owner of the 7-Eleven chain, signalling a potential shake-up at the retail giant.

ValueAct amassed a 4.4% stake in Seven & i and believes the sum of its parts is worth much more than its current market value, the fund told investors in a letter seen by Reuters.

The hedge fund said the 7-Eleven business could be worth more than double what its parent is currently valued at if the company restructures itself to focus on the convenience stores or if 7-Eleven is spun out.

“I share the same opinion. Seven & i will be better off focusing on the capital-light convenience store business,” said Oshadhi Kumarasiri, equity analyst at LightStream Research, publishing on the Smartkarma platform.

In a statement, Seven & i declined to comment on individual shareholder matters. It said it would continue to engage in dialogue with its shareholders.

In addition to 7-Eleven, arguably one of the world’s best known convenience stores, Seven & i’s businesses include department stores, supermarkets and financial services. Last year it spent $21 billion to buy Speedway convenience stores in North America.

Seven & i shares gained as much as 7.4% to their highest in more than two years on Thursday before closing up 5.0% compared to the broader Nikkei stock average’s 2.5% fall.

After Thursday’s gains, the company had a market value of about $39 billion, making ValueAct’s stake worth about $1.7 billion.

For a graphic on Seven & i shares:

This is not the first time that Tokyo-headquartered Seven & i has caught the fancy of an activist investor. Five years ago, Daniel Loeb’s Third Point successfully engineered a management reshuffle at the company but the drastic restructuring it had suggested did not come about.

The situation in Japan, however, has changed considerably since then, with shareholder activism gaining momentum amid a government push for better corporate governance and higher returns to investors.

ValueAct, whose style is of collaborating with management by making suggestions instead of dictating terms to management and the board, said in the letter it has engaged with Seven & i’s board directors and management and is optimistic that it can continue to build trust and alignment with the company.

San Francisco-based ValueAct has had some notable success in Japan, where companies traditionally have been wary of activist investors.

One of the fund’s partners, Robert Hale, joined the board of Olympus Corp in 2019. Shares in the maker of endoscopes have nearly trebled since early 2019.

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