News ReleaseLawson signs letter of intent with Poplar Co., Ltd. to develop a capital and business alliance

NEWS RELEASE

TOKYO, JAPAN, 10 01, 2014

 

Lawson, Inc. signed a letter of intent on October 1, 2014 with convenience store operator Poplar Co., Ltd. to form a capital and business alliance between the two companies. While the final contracts are still to be signed, Lawson and Poplar have already begun discussing the exact nature of their future business association, some of the details of which are outlined below.



1. Motivation for pursuing a formal association with Poplar Co., Ltd.


Lawson, as a manufacturer retailer of food based on small commercial areas, is committed to meeting the local needs of its customers. Lawson seeks to support the enriched, comfortable lifestyles of its customers, not only by providing ultimate convenience in shopping, but also by expanding its range of services on offer to include health and entertainment. Stepping beyond the conventional boundaries of the convenience store business, Lawson has developed a number of expansive strategies over recent years to help it stay abreast of changes in Japan's social environment. These include the company's drive to offer a multi-format structure which combines the convenience of its current store network with the broad range of produce you would expect in a small supermarket. Lawson is also looking to develop "home convenience" services by establishing a business platform for home deliveries.
Throughout its business history, Poplar Co., Ltd. has been committed to the provision of safe, secure, high-quality products and services. It has pursued a comprehensive business model which spans the production, wholesale and distribution of its own particular lunch boxes and other foodstuffs. It also prepares lunch boxes in-store, made from rice cooked fresh on the premises. In response to changing customer lifestyles over the past few years, Poplar has been seeking ways to strengthen its operational base over the medium to long term. The company has developed new products and built up new services. It has also empowered its sales royalty franchise system to help fuel an aggressive expansion of its store network in various commercial locations and geographical regions in Japan.
Lawson and Poplar decided to sign a letter of intent to form a capital and business alliance because both companies recognize the need to strengthen their management and operational structures even further if they are to compete fiercely in the rapidly-evolving convenience store business.
As part of the alliance, Lawson is expecting to buy a portion of Poplar's common stock from its major shareholder. Lawson and Poplar intend to discuss the concrete nature of the business association over the coming weeks, and aim to sign a contract outlining the formal capital and business alliance at the end of November 2014.




2. Outline of business association


(1) Capital alliance
Lawson is expected to purchase common stock in Poplar Co., Ltd. from the company's major shareholder equivalent to 5% of all outstanding shares.

(2) Business alliance
Lawson and Poplar intend to explore a number of options for mutual collaboration pertaining to the appropriate laws. These could include: joint development of new products, cooperative purchasing, sharing information relating to store development, conducting joint campaigns to promote sales, mutual exploitation of distribution infrastructure, personnel exchanges, etc. The two companies plan to hold separate meetings to determine the exact content of their future business collaboration and the overall direction it will take.



3. Overview of Poplar Co., Ltd. and Lawson, Inc.


(1) Poplar Co., Ltd.


(1) Company name Poplar Co., Ltd.
(2) Business location 665-1 Asacho Oaza Kuchi, Asakita-ku, Hiroshima
(3) Name and title of representative director Shinji Meguro, President & CEO
(4) Main areas of business operation Convenience store operation (654 stores at end August 2014 mainly in the Chugoku and Shikoku regions of Japan, as well as Kanto, Hokuriku, Kinki and Kyushu), drugstores, wholesale food business, insurance agency business
(5) Capital 2,410 million yen
(6) Established April 20, 1976
(7) Major shareholders and shareholdings (as of February 28, 2014)
Shunji Meguro 27.33％
Poplar Kyoeikai 17.32％
Poplar Employee Shareholding Association 3.14％
The Hiroshima Bank, Ltd. 2.14％
Nippon Life Insurance Company 1.88％
Mitsubishi Shokuhin Co., Ltd. 1.76％
The Momiji Bank, Ltd. 1.74％
Tokio Marine and Nichido Fire Insurance Co., Ltd. 1.39％
Mitsubishi UFJ Trust and Banking Corporation 1.34％
Meguro Co., Ltd. 1.27％
(8) Existing relationship with Lawson, Inc. Capital No significant relationship
Personal No significant relationship
Business No significant relationship
Other No significant relationship
(9) Recent overview of Poplar Co., Ltd. consolidated corporate results and financial position    (Millions of yen)
Financial period Year to February 2012 Year to February 2013 Year to February 2014
Net assets 7,102 7,050 4,720
Total assets 18,112 19,118 16,818
Net assets per share (Yen) 716.96 711.78 476.56
Total operating revenue 58,594 56,421 55,487
Operating profit 458 211 △780
Recurring profit 496 249 △742
Net profit △847 5 △2,300
Net earnings per share (Yen) △85.58 0.59 △232.25
Dividend per share (Yen) 10.00 10.00 5.00


(2) Lawson, Inc.


(1) Company name Lawson, Inc.
(2) Business location 1-11-2 Osaki, Shinagawa-ku, Tokyo
(3) Name and title of representative director Genichi Tamatsuka,
President & CEO, Representative Director
(4) Main areas of business operation Development of the Lawson convenience store franchise chain (11,987 stores across Japan at end August 2014)
(5) Capital 58,506 million yen
(6) Established April 15, 1975
(7) Major shareholders and shareholdings (as of February 28, 2014)
Mitsubishi Corporation 32.12％
The Master Trust Bank of Japan, Ltd. (Trust account) 3.11％
STATE STREET BANK AND TRUST COMPANY 505223 2.97％
Japan Trustee Services Bank, Ltd. (Trust account) 2.75％
NTT DOCOMO, INC. 2.09％
National Mutual Insurance Federation of Agricultural Cooperatives 1.65％
STATE STREET BANK AND TRUST COMPANY 1.58％
Nomura Securities Co., Ltd 1.47％
BBH FOR MATTHEWS ASIAN GROWTH AND INCOME FUND 1.33％
Mellon Bank, N.A. as agent for its client Mellon Omnibus US Pension 1.28％
(8) Existing relationship with Popular Co., Ltd. Capital No significant relationship
Personal No significant relationship
Business No significant relationship
Other No significant relationship
(9) Recent overview of Lawson, Inc. consolidated corporate results and financial position    (Millions of yen)
Financial period Year to February 2012 Year to February 2013 Year to February 2014
Net assets 214,662 230,181 250,497
Total assets 531,453 579,809 620,992
Net assets per share (Yen) 2,114.00 2,267.17 2,455.25
Net sales (all stores) 1,825,809 1,906,547 1,945,394
Operating profit 61,769 66,246 68,126
Recurring profit 61,728 65,926 68,880
Net profit 24,885 33,182 37,965
Net earnings per share (Yen) 249.17 332.20 380.04
Dividend per share (Yen) 180.00 200.00 220.00


4. Tentative schedule for forming the capital and business alliance


  (1) Sign letter of intent regarding pending business alliance October 1, 2014
  (2) Sign contract for capital and business alliance End November 2014 (tentative)
  (3) Capital and business alliance comes into effect Early December 2014 (tentative)


5. Future outlook


We do not expect the capital and business alliance with Poplar Co., Ltd. will have any significant impact on Lawson's consolidated business performance in the year ending February 2015.

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

 

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