Seven & I Holdings Co. is close to cutting a deal to sell the Osaka flagship outlet of its Sogo Co. department store chain to J. Front Retailing Co., sources said Tuesday.
The deal, likely to be finalized next week, is expected to cost J. Front ¥35 billion to ¥40 billion, according to the sources.
Industry watchers say Seven & I needs to consolidate its numerous department store operations across Japan, while J. Front group firm Daimaru Inc. is hoping to acquire the Sogo store in anticipation of growing competition in Osaka.
Seven & I asked J. Front to buy the store for ¥40 billion, but J. Front is insisting on ¥35 billion, the sources said.
They are likely to agree on a figure between the two prices in view of a considerable amount of investment that has been made to refurbish the store, according to the sources.
Seven & I has under its wing Millennium Retailing Inc., the holding company of Sogo and Seibu Department Stores Ltd.
Under Millennium's oversight is a nationwide network of 28 department stores, a large number in Japan even for a major retailer.
J. Front presides over the Daimaru and Matsuzakaya Co. department store chains. The Sogo store in Osaka is located in the busy Shinsaibashi shopping district and has floor space of 40,000 sq. meters.
The area will increase to 77,000 sq. meters if Daimaru, which has an outlet next door, takes over the Sogo store and combines the two into one huge store.