TOKYO • Japanese retailer FamilyMart UNY Holdings said it has offered to buy a 20 per cent stake in rival Don Quijote Holdings for 211.9 billion yen (S$2.6 billion), as the two companies try to weather a rapidly changing competitive landscape.
The move comes as traditional retailers such as big-box general merchandising chains and department stores struggle to stay competitive against fast-growing online and speciality players.
Don Quijote opened its first discount store in Singapore at Orchard Central in December last year under the name Don Don Donki because of an existing Don Quijote restaurant in Dempsey Road.
Don Quijote shares jumped more than 10 per cent to 6,680 yen yesterday, while the broader Tokyo market fell nearly 4 per cent.
FamilyMart UNY shares fell 5.6 per cent following the announcement, after rising 9 per cent on Wednesday.
FamilyMart UNY will make a tender offer to buy 20.17 per cent of Don Quijote for 6,600 yen a share for a total of 211.9 billion yen.
As part of the deal, FamilyMart UNY would sell all of its remaining 60 per cent stake in its UNY general merchandise store unit to Don Quijote, which is looking for locations to open more stores, popularly known as "Donki".
Don Quijote will pay 28.2 billion yen for the additional stake, after taking a 40 per cent slice last year.
The companies have already taken some steps, such as the conversion of six UNY locations into a new store format dubbed "MEGA Don Quijote UNY".
Sales from these stores nearly doubled after the conversion, the companies said.
FamilyMart UNY is Japan's second-largest convenience store operator, with about 16,700 locations.
Don Quijote is Japan's largest discounter.
Don Quijote said it would change its name to Pan Pacific International Holdings and has nominated founder Takao Yasuda back to its board.
Mr Yasuda stepped down from the board in June 2015. The company said Mr Yasuda, currently based in Singapore, would lead its overseas operations from there after rejoining the board.