Aeon Co. said it will buy the remaining shares in Daiei Inc. to make the struggling supermarket chain a wholly owned subsidiary next year, as part of efforts to turn around the company.
Aeon, Japan’s biggest retailer and the biggest shareholder in Daiei, possessing a 44.15 percent stake, aims to acquire the remainder by offering a share swap early next year.
It said Wednesday that Daiei will be delisted from the first section of the Tokyo Stock Exchange on Dec. 26.
Aeon agreed to pay ¥27.8 billion in stock for the rest of its money-losing rival.
The deal values Daiei shares at ¥125.35 each, based on Aeon’s agreement to pay 0.115 of its shares for each Daiei share.
For its part, Daiei said it expects to book a group net loss of ¥17.5 billion for its current business year through next February, revising downward an earlier forecast of ¥6 billion in loss.
Aeon established its equity relations with Daiei in 2007, in a deal that also involved trading house Marubeni Corp. with a 4.99 percent interest, while Daiei revamped its operations.
Household spending has slumped since April, after the first consumption tax increase since 1997, while wage gains have failed to keep pace with inflation.
Aeon’s plans to boost its businesses amid falling consumption led the company to announce five deals with a combined value of more than $609 million last year, including an investment in Daiei that raised its stake to about 44 percent, according to data compiled by Bloomberg.
To help bolster Daiei’s business, Aeon has already taken some measures, including the renovation of aging stores and crafting strategies that put more weight on food sales.
The planned buyout also reflects Aeon’s intention to accelerate reforms at Daiei, which posted a sixth consecutive annual group net loss for the business year that ended in February.
Supermarket sales fell 0.1 percent in August from a year earlier, the fifth month of decline, based on stores open at least one year. Department store sales dropped 0.3 percent, also the fifth consecutive monthly decrease.
Aeon’s share price has slumped 24 percent this year in Tokyo trading, compared with a 1.8 percent gain for the broader Topix index. Daiei surged 17 percent Wednesday, the biggest gain in 17 months, paring its decline this year to 18 percent.
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