Yamada Denki Co. will buy out competitor Best Denki Co. in a bid to solidify its position as the biggest home electronics retailer in Japan, industry sources said Thursday, adding the new group will have sales of over ¥2 trillion.
As moves to consolidate pick up in the retail industry, Yamada aims to enhance its business in Kyushu, Fukuoka-based Best Denki's main business turf, they said.
Yamada Denki, the second-largest shareholder of Best Denki, will likely spend around ¥10 billion to raise its stake to more than half from the current 7.4 percent. Best Denki is expected to maintain its listing and name even after becoming a subsidiary of Yamada Denki.
Yamada Denki's plan surfaced after Bic Camera Inc. acquired Kojima Co. in June, creating the No. 2 player in an industry in which retailers are feeling the pinch, due mainly to a plunge in TV sales.
Once the industry leader, Best Denki is now No. 7, with group sales of ¥261.7 billion in the year that ended in February.
In 2007, Yamada Denki bought shares of Best Denki and called on the company to form an alliance. But Best Denki refused and concluded a capital and business tieup with Bic Camera. Best Denki became an equity-method affiliate of Bic Camera in 2008.
Bic currently has a 15 percent stake in Best, but their alliance has not seen any progress as Bic chose to prioritize the tieup with Kojima, prompting Best to search for a new partner.