Convenience store chain FamilyMart Co. said Friday it will acquire smaller rival am/pm Japan Co. and turn it into a subsidiary in a bid to boost its competitiveness with other rivals amid sluggish consumption.
FamilyMart said it will purchase all shares in am/pm Japan from its parent company, Rex Holdings Co., on Dec. 24 in a transaction to be worth ¥12 billion.
With the acquisition, third-ranked FamilyMart and am/pm Japan, ranked seventh in the industry, will have a combined total of about 8,700 stores in Japan, helping FamilyMart close in on second-ranked Lawson Inc.
Lawson has approximately 9,700 stores, while industry leader Seven-Eleven Japan Co. has nearly 12,500 outlets in Japan.
FamilyMart said it will consult with am/pm Japan on their merger targeting next spring.
Through the move, FamilyMart said it hopes to strengthen its hold in the Tokyo metropolitan area — a source of strength for am/pm Japan, which has many stores at strategic places in the metropolis.
The deal will increase the two chains’ stores in Tokyo to about 1,700, which would surpass the corresponding figure for Seven-Eleven Japan, which had 1,646 as of Oct. 31.
FamilyMart also said it aims to streamline management infrastructure by sharing operations in systems infrastructure, purchase of products and raw materials, and commodity distribution.
Under the deal, all am/pm stores will be re-branded FamilyMart.
FamilyMart was initially negotiating to purchase am/pm Japan together with its top shareholder, major Japanese trading house Itochu Corp., according to sources.
But this was shelved after FamilyMart decided to proceed with the purchase on its own, as it apparently deemed it would be more effective for a player in the same convenience store industry to buy out the ailing am/pm Japan to restructure it, the sources said.
Industry analysts said the latest move is expected to realign Japan’s saturated convenience store industry and comes after Lawson’s failed buyout of am/pm Japan.
Lawson said in February it had agreed with Rex Holdings to acquire am/pm Japan and announced their business tieup in March.
But negotiations between the two broke down in May over a trademark disagreement, as am/pm International Inc., the U.S. company that owns the rights to am/pm’s trademark, wanted some stores to still carry the am/pm name, a demand Lawson did not accept.
Set up in 1990 as a subsidiary of Nippon Mining Holdings Inc., am/pm Japan was later acquired by Rex Holdings, which operates the Gyu-Kaku barbecue-beef restaurant chain.
Rex Holdings decided to sell am/pm Japan, which as of the end of October has about 1,100 stores nationwide.