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MarketScreener Homepage  >  Equities  >  Tokyo  >  Coco Kara Fine Inc    3098   JP3297330007

COCO KARA FINE INC

(3098)
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Japan's 'Matsukiyo' in merger talks to create drugstore giant

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08/14/2019 | 01:12am EDT

TOKYO (Reuters) - Japanese drugstore giant MatsumotoKiyoshi Holdings said it was starting talks to merge with rival Cocokara Fine Inc, possibly creating the country's biggest chain of discount pharmacies with nearly $10 billion in annual sales.

Cocokara Fine shares briefly jumped 9% on Wednesday after the company said it had decided to negotiate a potential merger with the bigger MatsumotoKiyoshi. It had considered a tie-up with another drugstore chain, Sugi Holdings, but chose an offer from MatsumotoKiyoshi instead, it said in a statement.

The companies said they could not comment on details of negotiations, such as possible terms and deadlines for the talks.

Known as "Matsukiyo", MatsumotoKiyoshi started as a mom-and-pop pharmacy in the 1930s and has grown rapidly through aggressive store openings and acquisitions. It was a pioneer in drugstores' sales of discount cosmetics, allowing consumers to more casually sample products.

It and other major drugstores have also expanded into snacks, soft drinks, and liquor, dealing a blow to the country's convenience stores and supermarkets. But drugstores, like the rest of Japan's retail industry, are now grappling with a dwindling workforce and tough price competition.

"It will not be easy to overcome business challenges on our own, and therefore it is appropriate for us to merge," Cocokara said in a statement.

"By combining with MatsumotoKiyoshi Holdings ... there is a chance of creating major synergies such as improving work efficiency and developing private brand products."

A merged company will earn over 1 trillion yen ($9.4 billion) in annual sales, topping sector leaders Welcia Holdings and Tsuruha Holdings.

Shares in Cocokara Fine surged to their highest since November 2018, and were up 1.3% in mid-afternoon trade, while MatsumotoKiyoshi shares fell 2%.

Shares in Sugi, which said it would look for other potential partners, rose around 2%.

(Reporting by Ritsuko Ando; Editing by Muralikumar Anantharaman and Stephen Coates)

By Ritsuko Ando

Stocks mentioned in the article
ChangeLast1st jan.
COCO KARA FINE INC 1.95% 5760 End-of-day quote.9.51%
MATSUMOTOKIYOSHI HOLDINGS CO., LTD. 2.27% 3835 End-of-day quote.18.91%
SUGI HOLDINGS CO.,LTD. 2.03% 5530 End-of-day quote.29.36%
TSURUHA HOLDINGS INC. 2.14% 11430 End-of-day quote.23.30%
WELCIA HOLDINGS CO LTD 0.93% 5440 End-of-day quote.10.57%
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08/14Japan's 'Matsukiyo' in merger talks to create drugstore giant
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Financials (JPY)
Sales 2020 407 B
EBIT 2020 13 000 M
Net income 2020 9 100 M
Debt 2020 -
Yield 2020 1,32%
P/E ratio 2020 15,2x
P/E ratio 2021 14,0x
Capi. / Sales2020 0,34x
Capi. / Sales2021 0,34x
Capitalization 138 B
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Mean consensus -
Number of Analysts 1
Average target price
Last Close Price 5 760,00  JPY
Spread / Highest target -
Spread / Average Target -
Spread / Lowest Target -
EPS Revisions
Managers
NameTitle
Atsushi Tsukamoto President & Representative Director
Tsuyoshi Yamamoto Director & Manager-Finance
Yasuyuki Oike Manager-Information Technology Development
Toru Shibata Director, Vice President & GM-Corporate Strategy
Akira Torii Independent Outside Director
Sector and Competitors
1st jan.Capitalization (M$)
COCO KARA FINE INC9.51%1 311
WALGREENS BOOTS ALLIANCE-27.82%44 543
MCKESSON CORPORATION31.12%26 783
AMERISOURCEBERGEN12.28%17 404
CARDINAL HEALTH-4.06%12 757
SINOPHARM HOLDING CO LTD-10.94%11 078