‘Matsukiyo’, Cocokara in tie-up talks

TOKYO: Japanese drugstore giant MatsumotoKiyoshi Holdings Co Ltd said yesterday that 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% 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.

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 one trillion yen ($9.4 billion) in annual sales, topping sector leaders Welcia Holdings Co Ltd and Tsuruha Holdings Co Ltd.