Aeon Co. Weighs Merger of Drugstore Unit Welcia With Rival Tsuruha — 3rd 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 combine two of Japan's biggest pharmacy chains in a fragmented market.
Shares of Tsuruha Holdings and Welcia Holdings surged 11% and 17%, respectively, on Monday, while Aeon shares gained 2.5%.
Aeon, Welcia and Tsuruha said Monday that they are considering the potential business integration, but a decision has yet to be made. Local media reported the possible merger over the weekend.
If combined, Welcia and Tsuruha's annual revenue would top 2 trillion yen ($13.29 billion) 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 due to new store openings and consolidation of players in recent years.
Tsuruha has projected net profit would increase 2.5% to Y25.90 billion ($172.1 million) for the 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 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 26, 2024 02:47 ET (07:47 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.-
What History Tells Us About the Fed’s Next Move
-
What’s Happening In the Markets This Week
-
Alphabet’s New Dividend: What Investors Need to Know
-
Going Into Earnings, Is Palantir Stock a Buy, a Sell, or Fairly Valued?
-
Going Into Earnings, Is Eli Lilly Stock a Buy, a Sell, or Fairly Valued?
-
What’s the Difference Between the CPI and PCE Indexes?
-
5 Stocks to Buy That We Still Like After They’ve Run Up
-
Markets Brief: Stocks Are Starting to Look Cheap Again
-
AbbVie Earnings: Next-Generation Immunology Drugs Help Offset Humira Biosimilar Pressure
-
Exxon Earnings: Ignore Earnings Shortfall as Long-Term Growth and Improvement on Track
-
American Airlines Earnings: We See Costs Overshadowing Market Share This Year
-
Snap Earnings: Advertising Growth and Snapchat+ Drive Monetization
-
STMicro Earnings: We Still See an Attractive Margin of Safety Despite a Poor First-Half Forecast
-
Alphabet Shares Surge on Strong Earnings, Dividend Surprise
-
Microsoft Earnings: Firm Beats Forecasts on Strong AI and Cloud Demand
-
PG&E Earnings: Near-Term Regulatory Certainty Supports Industry-Leading Earnings Growth