Japanese retailer FamilyMart Uny Holdings Co said it had offered to buy a 20 percent stake in rival Don Quijote Holdings Co for $1.9 billion, as the two companies try to weather a rapidly changing competitive landscape.
The move came as traditional retailers such as big-box general merchandising chains and department stores struggle to stay competitive against fast-growing online and speciality players.
Don Quijote shares jumped 7 percent, while FamilyMart Uny fell 5 percent in morning trade, following the announcement.
FamilyMart Uny would make a tender offer to buy 20.17 percent of Don Quijote for 6,600 yen a share for a total 211.9 billion yen ($1.9 billion), the two companies said in filings with the stock exchange.
As part of the deal, FamilyMart Uny would sell all of its remaining 60 percent stake in its Uny general merchandise store unit to Don Quijote, which is looking for locations to open more stores, popularly known as “Donki”.
Don Quijote would pay 28.2 billion yen for the additional stake, after taking a 40 percent slice last year.
The companies have already taken steps including the conversion of six Uny locations into a new store format dubbed “MEGA Don Quijote Uny.” Sales from these stores nearly doubled after the conversion, the companies said.
FamilyMart Uny is Japan’s second-largest convenience store operator with about 16,700 locations. Don Quijote is Japan’s largest discounter.
In a separate statement, Don Quijote said it would change its name to Pan Pacific International Holdings Corp and had nominated founder Takao Yasuda back to its board.
Yasuda stepped down from the board in June 2015. The company said Yasuda, currently based in Singapore, would lead its overseas operations from there after rejoining the board.