Aeon, Daei form alliance

March 9, 2007
By Ken Worsley

Aeon and Daei, two giant retailers who own a host of shops that no one ever admits to shopping at, announced a capital and business alliance today. Aeon, whose holdings include Jusco, Yamaya and Mini Stop, will buy 15% of Daiei for 46.2 billion yen from Marubeni, Daiei’s current largest shareholder. Aeon will also buy 20% of Maruetsu, another supermarket operator, by the end of this month.

According to an AFX News release:

Aeon, which is currently Japan’s largest supermarket store operator, recently lost its leadership position in the industry to arch-rival Seven & I Holdings after the holding company for Iyo-Yokado and Seven Eleven Japan acquired Millenium Retailing Group — the holding firm for Sogo and Seibu Department.

Aeon is known for turning companies around, and will thus be sending two board members and an auditor to Daiei. Daiei, which has suffered from severe image and branding problems, still holds more in interest-bearing debt than annual profit (up to 2006, not including 2006 final figures - I haven’t seen them yet). Nonetheless, Aeon president Motoya Okada expressed hope that Daiei could be turned around in 18 months.

The move is likely to accelerate the pace of M&As in the industry, and this observer wonders if Japan’s notorious distribution system might begin to see a bit of consolidation…

Filed Under Business, Retail