Aeon Co. Plans to Merge Japan Drugstore Unit Welcia With Rival Tsuruha — 2nd Update
By Kosaku Narioka
Aeon Co. plans to merge its Japanese drugstore unit Welcia Holdings with rival Tsuruha Holdings in a bid to solidify its presence in the domestic market and expand its drugstore operations in Southeast Asia.
The three companies said Wednesday that they aim to finalize merger terms by the end of 2027.
The companies said the possible business integration is aimed at improving the health and wellness of consumers in Japan, the Asean region and other markets.
As part of the merger process, Aeon agreed to acquire an additional 14% stake in Tsuruha from Hong Kong-based asset manager Oasis Management for 102.3 billion yen ($679.7 million). Aeon currently holds a 14% stake in Tsuruha.
Oasis said Aeon has a track record of leading drugstore consolidation in Japan, and it believes the stake sale will help raise Tsuruha's corporate value.
If combined, Welcia and Tsuruha's annual revenue would top Y2 trillion and be more than twice that of the third-biggest drugstore operator, MatsukiyoCocokara.
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 at home due to new store openings and consolidation of players in recent years, and the industry outlook remains murky due to Japan's shrinking population.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
February 28, 2024 05:56 ET (10:56 GMT)
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