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Shopping giants merging to cut operating costs

Date Posted: 2007-03-16

Aeon Group is teaming up with competitor Daiei and that company’s largest stockholder to create a mega-company.

Aeon Group and Daiei, the largest in Japan and a powerful economic force on Okinawa, have combined annual sales of more than ¥6 trillion. The announcement over the weekend surprised many observers, who see the merger of Aeon Group, Daiei and Maruben as a radical economic move.

Daiei’s food shops Maruetsu are also involved in the joint venture.

Aeon Group is transferring ¥62.7 billion in stock shares to Daiei and Marutsu. They say the merger will increase sales ¥300 billion annually, while allowing a 2.3% operating costs savings. Maruben and Aeon will have ¥1 billion in shares exchanged within the next three months.

Maruben says it wants to be known as ‘a winner’ in the distribution industry, and says Aeon’s involvement can enlarge the sales base. “It’s amply possible” says Aeon Group President Okada.

Daiei’s President Nishimi says “I am drawing up a plan that includes “the rebirth of Daiei”. Maruben will hand over 15.6% of its 44.6% ownership of Daiei.

Aeon Group will provide three auditors and directors for the merger transaction.

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