News ReleaseLawson, Inc. to acquire supermarket chain Seijo Ishii Co., Ltd.
TOKYO, JAPAN, 9 30, 2014
Lawson, Inc. signed a share transfer agreement on September 30, 2014 to acquire Seijo Ishii Co., Ltd. from Marunouchi Capital Co., Ltd. Under the agreement, the shares will be transferred from Marunouchi Capital Fund I, whose funds are managed and allocated by Marunouchi Capital.
1. Motivation for acquiring Seijo Ishii, Co., Ltd.
Lawson, as a developer and operator of convenience stores, is always looking for ways to complement changes in our social environment and customer lifestyles. Lawson has successfully added unparalleled value to its range of services. These include: Natural Lawson, designed to help enhance women's participation in society; Lawson Mart, designed to help today's nuclear families put good food on the table; the inclusion of pharmaceutical scales and health-store functions into Lawson's store network, the development of health-conscious food items such as Bran bread and the Pure Series range; and the sale of superior-quality, vegetables and delicatessen foods that would be the envy of any supermarket.
For its part, with the management philosophy of "Quality food for a quality life", Seijo Ishii has used its strong merchandising power to establish itself as a brand which always seeks to offer high added value, based on its corporate pursuit of superior-quality food and a bountiful society. Seijo Ishiii had expanded its store network, mainly in the Kanto district of Japan, to 120 stores by September 2014.
Lawson pursues the highest quality and best tasting food through its business model as a manufacturer retailer of food based on small commercial areas. In that sense, Lawson has plenty in common with Seijo Ishii, a company which prides itself on the development and manufacture of safe, secure foodstuffs. Lawson took the decision to make Seijo Ishii a fully-owned subsidiary, because it believes collaborating with Seijo Ishii could help Lawson hold its own against regular and upmarket supermarket chains.
Lawson intends to maintain Seijio Ishii's current business structure, out of respect for the company's management philosophy and its carefully-crafted brand base. Instead of instigating structural changes, Lawson will to use its power to acquire advantageous new store premises, its logistics and its valuable purchasing data to help Seijo Ishii boost its presence in Japan's major cities, and strengthen its already compelling competitive position.
2. Overview of the pending Lawson, Inc. subsidiary: Seijo Ishii Co., Ltd.
| (1) Company name | Seijo Ishii Co., Ltd. | |||
| (2) Company location | 2-9-30 Kitasaiwai, Nishi-ku, Yokohama, Kanagawa | |||
| (3) Business representative | Akihiko Hara, President & CEO | |||
| (4) Main areas of business | Supermarkets, import and wholesale business, food manufacture, restaurant operations | |||
| (5) Capital | 5.25 billion yen | |||
| (6) Company established | February 22, 2011 (operations began in 1927) | |||
| (7) Major shareholders and shareholdings | Marunouchi Capital Fund I 100% | |||
| (8) Existing relationship between Lawson, Inc. and Seijo Ishii Co., Ltd. | Capital relationship | None | ||
| Personal relationship | None | |||
| Business relationship | Purchase of some goods from Seijo Ishii such as wine and cheese | |||
| (9) Recent overview of Seijo Ishii Co., Ltd. consolidated corporate results and financial position | ||||
| Financial period | Year to December 2011 (Actual) (Yen) |
Year to December 2012 (Actual) (Yen) |
Year to December 2013 (Actual) (Yen) |
(Reference) September 2013 to August 2014 (Yen) |
| Consolidated net sales | 49,026 million | 51,777 million | 54,444 million | 60,135 million |
| Consolidated operating profit | 2,905 million | 3,126 million | 3,338 million | 4,864 million |
| Consolidated recurring profit | 2,290 million | 2,106 million | 2,289 million | 4,472 million |
| Consolidated net profit | 445 million | 1,140 million | 2,072 million | 4,462 million |
| EBITDA | 4,630 million | 5,394 million | 5,672 million | 7,254 million |
| Consolidate net earnings per share | 2,696.97 yen | 6,909.09 yen | 12,557.58 yen | 27,045.73 yen |
| Consolidated net worth | 22,667 million | 17,059 million | 18,831 million | － |
| Consolidated total assets | 53,778 million | 53,507 million | 52,948 million | － |
| Consolidated net assets per share | 137,375.76 yen | 103,387.88 yen | 114,127.27 yen | － |
| Dividend per share | － | － | 3,636.36 yen | － |
※As part of a corporate reorganization, Seijo Ishii Co., Ltd. transferred operations from the former company to a new company in May 2013. Therefore, the company's results for the year through December 2011 include performance under both the former and current company structures.
3. Overview of Marunouchi Capital Co., Ltd.
| (1) Fund name | Marunouchi Capital Fund I | |
| (2) Business location | 1-3-1 Marunouchi, Chiyoda-ku, Tokyo | |
| (3) Overview of investment fund | Company name | Marunouchi Capital Co., Ltd. |
| Company location | 1-3-1 Marunouchi, Chiyoda-ku, Tokyo | |
| Business representative | Takeshi Senda, President | |
| Main areas of business | Management and investment of assets held by the Marunouchi Capital fund, management consultancy services, etc. | |
| Capital | 500 million yen | |
| (4) Existing relationship between Lawson, Inc. and Marunouchi Capital Co., Ltd. | Existing relation between Lawson, Inc. and Marunouchi Capital's investment funds | None |
| Existing relation between Lawson, Inc. and Marunouchi Capital Co., Ltd. | None | |
| Existing relation between Lawson, Inc. and Japanese agency for the equity fund | None | |
4. Acquisition details: Number of shares, price and subsequent shareholding
| (1) Lawson, Inc. shareholding prior to acquisition | - shares (Number of voting rights: - rights) (Proportion of voting rights:－%) |
| (2) Numbers of shares acquired | 165,000 shares (Number of voting rights: 165,000) |
| (3) Cost of acquisition | Purchase of Seijo Ishii Co., Ltd. common stock 36,300 million yen Estimated advisory fees, etc. 120 million yen Estimated total cost 36,420 million yen |
| (4) Shareholding post acquisition | 165,000 shares (Number of voting rights: 165,000) (Proportion of voting rights: 100%) |
Lawson, Inc. plans to use its own cash reserves and bank loans to fund the acquisition.
5. Acquisition schedule
| (1) Board approval | August 5, 2014 |
| (2) Exchange of contracts | September 30, 2014 |
| (3) Execution of stock transfer | October 31, 2014 (tentative) |
At its meeting held on August 5, 2014, Lawson's Board of Directors gave permission for company to participate in the bidding process for Seijo Ishii. If the bidding was successful, the Board also authorized the start of negotiations and the signing of a share transfer agreement with Marunouchi Capital. Once the content of the share transfer agreement was finalized, Lawson's representative director, Genichi Tamatsuka, decided to go ahead with the acquisition based upon the Board's previously-assigned mandate. The share transfer agreement between Lawson, Inc. and Marunouchi Capital Co., Ltd. was then signed on September 30, 2014.
The exact date for executing the share transfer could change slightly depending on the pre-acquisition notification schedule required by the Fair Trade Commission.
6. Future outlook
Following this share acquisition, Seijo Ishii will become a subsidiary of Lawson. However, we do not expect this acquisition will have any significant impact on Lawson's consolidated business performance.
Reference: Lawson's consolidated results for the year through February 2014, and the latest estimates for the year through February 2015 (announced April 10, 2014)
| Total operating revenue (¥ million) |
Operating profit (¥ million) |
Recurring profit (¥ million) |
Net profit (¥ million) |
|
| Consolidated business estimates for FY2014 (announced April 10) | 498,000 | 75,000 | 73,900 | 38,900 |
| Consolidated business results for FY2013 (Year to February 2013) | 485,247 | 68,126 | 68,880 | 37,965 |
