Aeon Co. is set to merge its Japanese drugstore unit Welcia Holdings with rival Tsuruha Holdings in a strategic move to strengthen its foothold in the local market and extend its drugstore presence across Southeast Asia.
Merger Agreement in the Works
The trio of companies disclosed on Wednesday their intention to finalize the terms of the merger by the conclusion of 2027. The primary objective behind this potential business integration is to enhance the health and wellness offerings for consumers in Japan, the Asean region, and other key markets.
Aeon’s Acquisition Plan
As a part of the merger proceedings, Aeon has committed to purchasing an additional 14% stake in Tsuruha from Hong Kong-based asset manager Oasis Management for a sum of 102.3 billion yen ($679.7 million). Currently, Aeon holds a 14% stake in Tsuruha. Oasis Management expressed confidence in Aeon’s ability to drive drugstore consolidation in Japan and anticipates that the stake sale will positively impact Tsuruha’s corporate value.
Strengthening Market Position
The combined entity of Welcia and Tsuruha is estimated to surpass Y2 trillion in annual revenue, exceeding the figures of the third-largest drugstore operator, MatsukiyoCocokara, by more than twofold. Despite recent growth in sales at local drugstores, fueled by a rebound in shopper numbers – including foreign tourists – and reduced pandemic-related demand, the sector faces intense competition from new market entrants and ongoing consolidation among industry players. Moreover, uncertainties loom over the industry’s future prospects due to Japan’s declining population.
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