TOKYO, Feb 26 (Reuters) - Japanese drugstore firms MatsumotoKiyoshi Holdings and Cocokara Fine Inc said on Friday they agreed to merge, after forming a partial alliance last year.

MatsumotoKiyoshi had bought 20% of Cocokara Fine for roughly $350 million last year, aiming for greater scale to cope with fierce price competition and rising labour costs. (Reporting by Ritsuko Ando; Editing by Jacqueline Wong)