Bloomberg News

Aeon to Acquire Japanese Grocers in Biggest Purchase Since 2008

October 05, 2011

Oct. 6 (Bloomberg) -- Aeon Co., Japan’s largest supermarket operator, agreed to acquire regional grocers Marunaka Co. and Sanyo Marunaka KK to expand in the western part of the country with its biggest purchase since 2008.

The retailer will pay 45 billion yen ($587 million) for the closely held supermarket chains in a transaction to be completed Nov. 25, the Chiba, Japan-based Aeon said in a statement to the Tokyo Stock Exchange yesterday. The price amounts to 0.14 times revenue, compared with the median 0.25 times for acquisitions of Japanese retailers in the past three years, based on figures in the statement and Bloomberg data.

Aeon will add the two grocers’ 211 outlets to the chain of about 1,300 supermarkets nationwide as it invests in opening stores to boost growth, President Motoya Okada said. The retailer is expanding amid a recovery in demand as northeastern Japan rebuilds from the March 11 earthquake and consumers seek electricity-saving light bulbs, air conditioners and refrigerators amid concern about possible power shortages.

“We need to concentrate on opening stores for a short period of time, otherwise it would be tough in terms of profitability,” Okada told reporters in Tokyo yesterday. “Marunaka has a good network of outlets in the west of Japan and we can help in distribution.”

Marunaka and Sanyo Marunaka had combined operating profit of 8.2 billion yen in the year ended March 31, on sales of 330 billion yen, according to the Aeon statement.

Aeon fell 0.7 percent to 1,027 yen at the 3 p.m. close in Tokyo trading yesterday, while the benchmark Nikkei 225 Stock Average declined 0.9 percent.

Forecast Raised

Separately, Aeon raised its profit forecast by as much as 36 percent from the previous estimate to a record.

Net income will be between 63 billion yen and 68 billion yen for the year ending February, compared with a previous projection of 50 billion yen, it said yesterday.

The Marunaka chains’ revenue will be added to Aeon’s results this fiscal year, the retailer said in the statement.

The Marunaka and Sanyo Marunaka acquisition is also the biggest this year of a retailer in Japan after MM Holdings Co.’s $1.25 billion purchase of Culture Convenience Club Co., completed in July.

--With assistance from Gearoid Reidy in Tokyo and Mohammed Hadi in Singapore. Editors: Dave McCombs, Suresh Seshadri.

To contact the reporter on this story: Miyuki Seguchi in Tokyo at mseguchi@bloomberg.net; Shunichi Ozasa in Tokyo at sozasa@bloomberg.net

To contact the editor responsible for this story: Dave McCombs at dmccombs@bloomberg.net; Kyung Bok Cho at kcho7@bloomberg.net


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