Japanese Drugstore Chains Tsuruha, Welcia to Merge

Yomiuri Shimbun file photos
The logos of Tsuruha and Welcia

Sapporo (Jiji Press)—Japanese drugstore chains Tsuruha Holdings Inc. and Welcia Holdings Co. said Wednesday that they will start talks to integrate their operations, whose combined annual sales exceed ¥2 trillion.

Retail giant Aeon Co., which already holds equity stakes in both companies, will buy an additional 13.6 pct stake in Tsuruha for ¥102.3 billion from Hong Kong investment fund Oasis Management Co. in March. Welcia, an Aeon subsidiary, will later become a wholly owned subsidiary of Tsuruha.

After the integration, Aeon will make Tsuruha a consolidated subsidiary by boosting its shareholding to about 50 pct.

The three companies plan to finish these procedures by the end of 2027.

They agreed to form a capital and business tie-up under which the drugstore chains will cooperate to develop new stores and private brand products and increase outlets that can sell prescription drugs.

They aim to boost annual sales at the two chains to ¥3 trillion within five years of the integration, partly by accelerating expansion of their store networks abroad especially in Southeast Asia.

“The business environment surrounding the industry has changed significantly. The industry is entering a period of low growth,” Aeon President Akio Yoshida told a press conference.

“By gaining economies of scale, we will be able to contribute more to resolving social problems related to health,” Yoshida said.

“We have concluded that the integration is the best way to quickly adapt to changes in the external environment. We can obtain an overwhelming competitive edge,” Tsuruha President Jun Tsuruha said.

A top executive of Tsuruha is expected to become president of the Tsuruha-Welcia group.

Tsuruha’s management had a dispute with Oasis Management, which proposed last year that Tsuruha replace all outside directors. The proposal was voted down at a shareholders’ meeting in August as Aeon backed Tsuruha.

In January this year, Aeon said it would start exclusive negotiations with Oasis Management to buy its Tsuruha shares.