News ReleaseThree F and Lawson sign a capital and business alliance contract, and a business integration contract to establish and operate a joint venture company.

NEWS RELEASE

TOKYO, JAPAN, 4 13, 2016

 

Three F Co., Ltd. and Lawson, Inc. signed a capital and business alliance contract as well as a business integration contract to establish and operate a joint venture company, both dated April 13, 2016.


As conditions in the convenience store continue to change rapidly, both Three F and Lawson have been keenly aware of the need to build upon respective business initiatives and further strengthen their business management. As a result, the two companies agreed basic terms for a capital and business alliance on November 27, 2015. Following subsequent concrete investigations and confirmation of potential synergy benefits from close cooperation, Three F and Lawson signed a full capital and business alliance contract on April 13, 2015.


As part of an capital and business alliance, Lawson and Three F also signed a business integration agreement on the same day, encompassing the establishment of a joint-venture company responsible for joint store management. This contract is based on the idea to consider the transfer of a portion of Three F’s convenience store rights and obligations to Lawson.


Three F is highly regarded by local customers as a committed convenience store chain operator in the Metropolitan area, including Tokyo, Kanagawa, Saitama and Chiba. Originally, Three F operated as the convenience-store arm of a supermarket business. It subsequently exploited that founding DNA and expertise to expand sales of fresh produce, and also pursue its own product expansion strategy to include comics and books, and so on.


As a manufacturing retailer based on small commercial areas, Lawson strives to offer customers the ultimate in convenience, and to support the overall needs of everyday life by offering a wide variety of different services. Lawson’s home convenience service, developed as a home-delivery platform, and other measures illustrate how Lawson has been responding to changing social demographics and customer lifestyles over recent years by pursuing a diverse strategy that extends far beyond the traditional convenience store remit.


The key components of the capital and business alliance, and the business integration agreement to establish and operate a joint-venture company are listed below:


■Capital and business alliance agreement

  • (1) Capital alliance
    Lawson will acquire Three F common stock from Three F existing shareholders equivalent to a maximum 5% of total outstanding shares.

  • (2) Business alliance
    The agreement will cover various future activities permitted under business alliance laws and regulations, including the sharing of raw ingredients, joint product development, joint product procurement and joint sales promotion campaigns. The companies will discuss regularly the concrete measures and means they wish to pursue under the new business alliance.

  • (3) Time Frame
    The signing of the share purchase agreement between Three F existing shareholders and Lawson is scheduled to take place on April 14, 2016.

■Business integration agreement on establishment/operation of a joint-venture company

  • (1) Three F will establish a fully-owned subsidiary via an incorporation-type company split, and transfer 30% of the issued stock to Lawson. As a result, Three F will own 70% and Lawson will own 30% of the joint-venture company stock. The joint-venture company will be tasked with building a new store management framework by gradually shifting a portion of stores currently operating under the “Three F” brand (probably approximately 90 stores) to a new “Lawson Three F” brand using Lawson’s current franchise package arrangement.

  • (2) Three F will transfer a portion of the assets, rights and obligations relating to the stores for transfer referred to in (1) above to Lawson through an absorption-type company split. Details of the company split will be disclosed once they have been confirmed.

  • (3) Time frame
    Date of Board of Directors’ authorization for incorporation-type company split: TBA
    Date of Board of Directors’ authorization for absorption-type company split: TBA

Date of entry into force of incorporation-type company split: September 1, 2016 (tentative)

Date of entry into force of absorption-type company split: September 1, 2016 (tentative)

Date of Board of Directors’ authorization for transfer of stock in newly established company: September 1, 2016 (tentative)


Three F and Lawson are committed to using both firms’ unique strengths to develop community-focused convenience stores that can improve overall customer convenience.


■ Overview of Three F Co., Ltd. and Lawson, Inc.

(1) Three F Co., Ltd.

(1) Company name Three F Co., Ltd.
(2) Business location 17 Nihon-odori, Naka-ku, Yokohama-city, Kanagawa
(3) Name and title of representative director Katsutoshi Nakai, President, Representative Director
(4) Main areas of business operation Operation and support for franchisees of Thee F convenience stores
(539 stores in Tokyo and other prefectures at the end of February 2016)
(5) Capital 1,396 million yen
(6) Established February 10, 1981
(7) Major shareholders and shareholdings (as of February 28, 2015) JMK Mizuho Co., Ltd.
Junji Kikuchi
Kyoko Nakai
Mizue Usami
Three F Co., Ltd.
Katsutoshi Nakai
Mizuho Bank, Ltd.
Three F Employee Shareholding Association
Mizuho Kikuchi
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
35.06%
4.99%
4.11%
3.42%
1.71%
1.42%
1.41%
1.37%
1.31%
1.16%
(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 Three F Co., Ltd. consolidated corporate results and financial position (Millions of yen)
Financial period Year to February
2013
Year to February
2014
Year to February
2015
Net assets 5,212 4,015 3,998
Total assets 16,099 14,340 15,802
Net assets per share (Yen) 668.02 509.64 514.27
Total operating revenue 24,397 22,434 20,990
Operating profit 53 168 △353
Recurring profit 116 215 △305
Net profit △509 △1,153 54
Net earnings per share (Yen) △67.20 △152.30 7.23
Dividend per share (Yen) 8.00 3.00 3.00


(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(12,276 stores across Japan at end February 2015)
(5) Capital 58,506 million yen
(6) Established April 15, 1975
(7) Major shareholders and shareholdings (as of February 28, 2015) Mitsubishi Corporation
The Master Trust Bank of Japan, Ltd. (Trust account)
Japan Trustee Services Bank, Ltd. (Trust account)
NTT DOCOMO, INC.
Nomura Securities Co., Ltd
JP MORGAN CHASE BANK 380055
MELLON BANK, N.A. AS AGENT FOR ITS CLIENT MELLON OMNIBUS US PENSION
BBH FOR MATTHEWS ASIAN GROWTH AND INCOME FUND
National Mutual Insurance Federation of Agricultural
Cooperatives
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
31.99%
2.68%
2.63%
2.09%
1.86%
1.47%
1.38%

1.27%

1.26%

1.05%
(8) Existing relationship with Three F 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 end February
2013
Year to end February
2014
Year to end February
2015
Net assets 230,181 250,497 263,797
Total assets 579,809 620,992 764,614
Net assets per share (Yen) 2,267.17 2,455.25 2,561.25
Net sales (all stores) 1,906,547 1,945,394 1,961,983
Operating profit 66,246 68,126 70,482
Recurring profit 65,926 68,880 71,714
Net profit 33,182 37,965 32,686
Net earnings per share (Yen) 332.20 380.04 327.08
Dividend per share (Yen) 200.00 220.00 240.00

 

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