Bic Camera Inc., Japan’s No. 5 consumer electronics retail chain, plans to buy out No. 6-ranked Kojima Co., sources said, making it the second-largest electronics retailer in Japan.
The acquisition was announced on May 11.
The new group’s annual sales would be around 1 trillion yen ($12.5 billion), second to Yamada Denki Co.’s roughly 2 trillion yen.
Bic Camera is expected to buy a majority stake in Kojima for 12 billion to 13 billion yen by responding to third-party allocation in June. Bic Camera plans to keep Kojima listed after putting it under the Bic Camera umbrella, and also to keep Kojima outlets for the time being as they are.
The two retailers have little overlap in their outlet networks. Bic Camera owns some 40 stores mainly in urban areas, and Kojima operates about 200 chiefly in the outlying suburbs.
The affiliation is designed to boost competitiveness by lowering costs of buying products from makers by facilitating larger purchases.
Behind the move is a strong sense of crisis over a shrinking market.
The government’s eco-point subsidies plan for home appliances ended in March last year, and the country switched to digital terrestrial broadcasting in July. (The move concluded in March this year in Iwate, Miyagi and Fukushima prefectures--the hardest-hit areas in the Great East Japan Earthquake.) Demand to replace flat TVs has since nose-dived. A continuing decline in sale prices of TVs is weighing on retail businesses.
Kojima’s monthly sales stayed above numbers a year earlier until July last year, but they plunged 34 percent in August year on year. The retailer has since seen roughly 30 percent lower sales than a year earlier. The company’s annual sales through the end of March this year fell 17.8 percent year on year.
In April, Bic Camera lowered its October earnings forecasts for the year ending August 2012. The company also revised its operating profit projection from the initial 20 billion yen to 9 billion yen. It said that was because declines from rush demand before the transition to the digital terrestrial broadcasting were beyond its expectations.
The industry leader, Yamada Denki, on May 10 reported sharp year-on-year declines in sales, operating profits and net profits for the fiscal year ended in March.
Facing the sagging market, there could be more mergers and acquisitions in the industry.
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