Family Mart And Uny Eye Merger

 

FamilyMart Co and home goods retailer Uny Group Holdings Co are in merger talks that might create Japan’s second-largest convenience store chain by sales, as operators seek cost savings.

Uny is considering options including mergers with other companies, and no decision has been made, the company said in a statement to the Tokyo Stock Exchange. FamilyMart also confirmed in a statement that it is in talks with Uny, which has a market value of about ￥169 billion (US$1.41 billion).

FamilyMart is competing against the popular 7-Eleven chain which is Japan’s largest convenience store network, and No. 2 Lawson to keep prices down by raising volume. Japan’s convenience stores are luring customers from supermarkets and fast-food restaurants by selling boxed meals and competitively priced groceries and offering services such as banking via ATM, utility payments, international phone cards, and parcel service.

“The merger would give both FamilyMart and Uny greater economies of scale,” JPMorgan Securities analyst Dairo Murata said.

The deal might also increase expectations for further convenience store market consolidation, he said.

FamilyMart chief executive officer Junji Ueda said he does not plan to spend too much time before reaching an agreement with Uny.  "We made our offer and Uny will accept or reject it.  We do not plan to participate in drawn out talks."

Uny shares surged 11 percent, the biggest intraday gain since 2008, to ￥742, before trading at ￥724 at 11:30am yesterday in Tokyo. FamilyMart shares fell 2.9 percent.

Itochu Corp owns 36 percent of FamilyMart and about 3 percent of Uny, according to data compiled by Bloomberg.

Uny’s Circle K and Sunkus chains had 6,328 stores in Japan as of January, compared with FamilyMart’s 11,271 and Seven & I’s 17,491, according to the companies’ Web sites. Lawson has about 12,000 stores in the nation.

Daniel Rea