Major supermarket chain Aeon Co. announced Wednesday it will increase its stake in Daiei Inc. and make the smaller supermarket retailer a subsidiary, creating a huge retailing group with combined sales exceeding ¥6 trillion.
Aeon, which already owns a 19.9 percent stake in Daiei, plans to acquire a further 24.3 percent stake from major trading house Marubeni Corp., which currently holds around 29.3 percent, through a takeover bid to begin early next month, Aeon President Motoya Okada told a news conference in Tokyo in which Daiei President Michio Kuwahara was also present.
Aeon aims to gain control of Daiei, which has numerous outlets in major cities in the Kanto and Kansai regions, to broaden its customer base in line with its strategy to reinforce operations in big urban centers.
The deal will make Aeon the single dominant force in the nation’s supermarket business.
Seven & I Holdings Co., operator of the Ito-Yokado chain and Seven-Eleven convenience stores, is the nation’s second-biggest retailer.
Aeon will presumably renovate aging Daiei outlets while expanding the supply of Aeon’s private-brand products.
The move follows an announcement earlier this month by Aeon that it will acquire midsize supermarket chain Peacock Stores Inc. from J. Front Retailing Co. for ¥30 billion.
“We face severe business circumstances and fierce competition, (and) there are a lot of things we can do” by making Daiei a subsidiary, Aeon President Motoya Okada said in a press conference in Tokyo, adding that the company plans to further expand the number of new stores next year and thereafter.
Marubeni has been rebuilding Daiei since acquiring the entire stake held by the government-backed Industrial Revitalization Corp. of Japan in 2006.
By acquiring the Daiei stake and getting a foothold in the retail sector, Marubeni initially aimed at becoming a dominant force in the food supply business by taking advantage of its longtime expertise in importing crops from overseas.
But Daiei missed its business targets year after year due partly to the stagnant economy and persistent deflation.
Aeon previously turned around supermarket chain Mycal Corp.
