Japan's FamilyMart to unload Uny, take $1.9 billion stake in Don Quijote
TOKYO (Reuters) - Japan’s FamilyMart Uny Holdings Co (8028.T) offered to sell its entire stake in struggling general-merchandising unit Uny to discount retailer Don Quijote Holdings Co (7532.T), and take a 20 percent stake in the fast-growing chain for $1.9 billion.
The two-way deal allows the FamilyMart group to focus on its convenience stores, which have been far more profitable than the Uny shops but are facing growing competition from discount drug stores and emerging online businesses.
For Don Quijote, which has defied Japan’s weak retail environment with solid sales for around 30 years and is now the country’s biggest discounter, the deal offers scale as well as funding.
Dubbed “Donki” and known for selling an eclectic mix of products such as leopard-print rugs and designer handbags, Don Quijote bought a 40 percent stake in Uny last year.
It had begun converting some struggling shops into joint big-box shops named “MEGA Don Quijote Uny”, and the company said it had succeeded in doubling sales as a result.
Don Quijote will pay 28.2 billion yen ($251.6 million) for the remaining 60 percent stake in Uny, the two companies said in filings with the stock exchange.
FamilyMart Uny will make a tender offer to buy 20.17 percent of Don Quijote for 6,600 yen a share, for a total 211.9 billion yen, they said.
Don Quijote shares jumped 6.8 percent to 6,460 yen while the broader Tokyo market fell around 4 percent, adding to a 5 percent gain on Wednesday when discussions were first reported by Nikkei Business magazine. FamilyMart Uny fell 6.5 percent following the announcement, after rising 9 percent on Wednesday.
FamilyMart Uny is Japan’s second-largest convenience store operator with about 16,700 locations. FamilyMart and Uny, which had owned convenience store chain Circle K Sunkus, merged in 2016 to join forces against Seven-Eleven Japan, owned by Seven & i Holdings (3382.T).
Don Quijote said it would change its name to Pan Pacific International Holdings Corp.
It also nominated founder Takao Yasuda back to the board. He had stepped down from its board in June 2015, moving to Singapore, and had been pushing for its overseas expansion efforts from there.FamilyMart UNY Holdings Co Ltd12980.08028.TTokyo Stock Exchange-980.00(-7.02%)