A list of candidates to sponsor struggling retail giant Daiei Inc. has been narrowed to three groups. But a final selection by the state-backed corporate bailout agency is far from certain, because the three picked are doing different businesses and there is no decisive factor.

The Industrial Revitalization Corp. of Japan last week picked groups led by supermarket chain Aeon Co., trading house Marubeni Corp. and Kiacon Corp., a fund to revitalize retailers.

Foreign-led consortiums, some of them regarded as powerful candidates, were kicked off the list.

IRCJ is expected to finally pick the sponsor by the end of March after inviting a third bid in February.

Initially, the most powerful candidates were a group led by supermarket chain Ito-Yokado Co. that formed an alliance with trading house Mitsui & Co., and with First Retailing Co., which runs the Uniqlo clothing store chain.

But they were weeded out from the candidate list because they lack experience in corporate purchases and had suggested the need for IRCJ to review its plan to close 53 Daiei stores.

Emerged as a candidate from the supermarket industry was Aeon, which had helped the rehabilitation of Mycal Corp. and Yaohan Japan Corp., both ailing supermarket chains, and its partner in the Daiei case, technology firm Kyocera Corp., had also reconstructed Mita Industrial Co.

In talks with IRCJ executives, Aeon President Motoya Okada said he will respect Daiei’s independence and utilize its management resources as much as possible, supporting IRCJ’s goal of retaining Daiei’s reputation, the sources said.

But Aeon’s business performance cannot be said to be favorable, and the strategies of Aeon and Daiei are different, with Aeon running shops mostly on the outskirts of cities and Daiei operating mainly within.

To supplement this weakness, Aeon has called on trading house Mitsubishi Corp. with the convenience store chain Lawson Inc. under its wing, to form an alliance, but there has been no positive response.

The sources said that if Aeon finally becomes the sponsor, there might erupt a chorus of dissatisfaction among lawmakers of the ruling Liberal Democratic Party because Katsuya Okada, head of the Democratic Party of Japan, belongs to Aeon’s founding family.

Marubeni, the second top shareholder of Maruetsu Inc., a food supermarket chain in the Daiei group, has successfully reconstructed Tobu Store Co.

It once sought an alliance with U.S. retail giant Wal-Mart Stores Inc. but changed its mind and formed an alliance with U.S. investment firm Ripplewood Holdings LLC after IRCJ took a posture against a comprehensive supermarket line.

Again, Marubeni changed its mind when it heard IRCJ does not want Daiei sold to a foreign fund and formed an alliance with Japanese fund Advantage Partners Inc.

Thus, Marubeni is loyal to IRCJ’s intention of revitalizing Daiei with food as its main business, but industry analysts doubted whether Marubeni has its own individuality and ideas.

On the other hand, Kiacon of Tokyo has been attracting attention as a dark horse. With its uniqueness — the company name is a combination of “kiai” (spirit) and “konjo” (willpower) — its attractiveness is the ability of Kiacon President Takashi Sawada, former vice president of First Retailing and formerly with trading house Itochu Corp., the business sources said.

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