Aeon Co. Mulls Merger of Drugstore Unit Welcia With Domestic Rival Tsuruha — 2nd Update
By Kosaku Narioka
Aeon Co. said it is considering a merger of its Japanese drugstore unit Welcia Holdings with domestic rival Tsuruha Holdings, a move that would create a giant force in a fragmented market.
Japanese retailer Aeon, the parent of Welcia, said Monday that no decision has been made on the possible merger.
Tsuruha Holdings shares were recently 10% higher, Welcia Holdings shares were recently up 14% and Aeon shares rose 1.4%.
Aeon made the comments following local media reports of the potential merger over the weekend.
Sales at domestic drugstores have grown in recent quarters, thanks to a recovery in the number of shoppers, including foreign tourists, while pandemic-related demand has subsided.
Yet, competition has been fierce as a result of new store openings and consolidation of players in recent years.
Tsuruha has projected net profit would increase 2.5% to 25.90 billion yen ($172.1 million) for the fiscal year ending May 15, with revenue forecast to grow 6.5% to Y1.033 trillion.
Welcia expects net profit to rise 3.6% to Y28.00 billion and revenue to climb 7.5% to Y1.230 trillion for the fiscal year ending Feb. 29.
Aeon in January said it was in talks with Hong Kong-based asset manager Oasis Management to acquire shares of Tsuruha as part of efforts to strengthen its existing tie-up with the Japanese drugstore operator.
Aeon held a 14% stake in Tsuruha as of mid-November. Oasis had a 13% stake in the drugstore operator as of May 2023.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
February 25, 2024 22:18 ET (03:18 GMT)
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