Aeon to Pay About $254 Million in Stock Deal for Daiei

Aeon Co., Japan’s largest retailer, agreed to buy the rest of money-losing rival Daiei Inc. and make the supermarket chain a fully owned unit in a stock deal valued at 27.8 billion yen ($254 million) yesterday.

The deal valued Daiei shares at 125.35 yen each, based on Aeon’s agreement to pay 0.115 of its shares for each Daiei share and Aeon’s closing price yesterday. That’s about 3.6 percent more than Daiei’s 121 yen closing price on Sept. 22. Aeon rose 2.3 percent to 1114.5 yen at the close of Tokyo trading today, while Daiei dropped 11 percent to 127 yen.

Household spending in Asia’s second-largest economy has slumped since April after Japan’s first sales-tax increase since 1997, as wage gains have failed to keep pace with inflation. Aeon’s plans to boost its businesses amid falling consumption led the company to announce five deals with a combined value of more than $609 million last year, including an investment in Daiei that raised its stake to about 44 percent, according to data compiled by Bloomberg.

Daiei almost tripled its net loss forecast for the 12 months ending February 2015, according to a separate statement released after the market closed yesterday. The retailer will probably report a deficit of 17.5 billion yen, compared with its previous outlook for a 6 billion yen loss.

Daiei will focus on metropolitan areas where 90 percent of its stores are located and concentrate on selling food, according to the statement. The deal with Aeon is subject to a vote at Daiei’s Nov. 26 shareholder meeting.

Supermarket sales fell 0.1 percent in August from a year earlier, the fifth month of decline, based on stores open at least one year. Department store sales dropped 0.3 percent, also the fifth consecutive monthly decrease.

Aeon has slumped 22 percent this year in Tokyo trading, compared with a 3.4 percent gain for the broader Topix Index. Daiei has declined 27 percent this year.

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