Bic Camera Inc., the nation's fifth-largest consumer electronics discount retailer, decided in a board of directors meeting Friday to acquire rival Kojima Co. to become the industry's second-biggest company, it said.
Bic Camera will acquire more than 50 per cent of Kojima through the latter's private placement of new shares in late June, which Bic Camera will have the exclusive right to buy, the company said. Private placement of new shares, also referred to as third-party allocation, is a means of increasing capital by giving a company sole rights to the purchase.
Bic Camera will pay 14.1 billion yen (S$220 million) for the 50-per cent-plus stake in Kojima, making Kojima its subsidiary, Bic Camera officials said.
Kojima's board of directors decided at a meeting the same day to accept the takeover bid by Bic Camera. When the purchase is made official, Bic Camera President Hiroyuki Miyajima will assume the post of Kojima's outside board member, according to Bic Camera.
Annual group sales of Bic Camera and Kojima are more than 1 trillion yen combined, second only to Yamada Denki Co., at about 2 trillion yen.
The consumer electronics retail industry is struggling to survive mainly amid a significant slump in sales of flat-panel televisions after the government ended its eco-point incentive program for newly bought home appliances in March 2011.
With the acquisition, the two companies aim to ensure their survival by boosting business efficiency through expanding their scale of operations, the Bic Camera officials said.
News of the buyout drove up shares in Bic Camera on the Tokyo Stock Exchange, briefly hitting 41,350 yen in morning trading, up 2,850 yen from the day before. Shares in Kojima also rose, hitting 435 yen in the morning, up 73 yen from Thursday's close.
Bic Camera was established in 1978 in Ikebukuro, Tokyo, as a discount retailer of cameras and related products. Capitalized at 18.4 billion yen, it operates 34 stores under its direct management, mostly near major Tokyo train stations. The company had 5,827 employees as of the end of August.
Kojima was founded in 1955, with its headquarters in Utsunomiya. With 18.9 billion yen in paid-in capital, it runs 211 stores across the country, mostly on major roads, employing 4,336 people as of the end of March last year.
Bic Camera's acquisition of Kojima can be seen as the beginning of a realignment of the electronics retail industry, which has been plagued with decreased sales due to excessive competition amid a sharp decline in the number of people buying TVs after the government ended its eco-point system and the phasing out of analog TV broadcasting last summer, according to analysts.
Domestic shipments of flat-panel TVs reached an all-time high of 25 million units in 2010, but slipped to 19.83 million in 2011. The figure is expected to fall to about 9 million from 2012. After the surge in demand during the eco-points program, retail prices of TVs have declined significantly.
Yamada Denki, which leads the electronics retail sector, posted a consolidated operating profit of 88.9 billion yen for the business year that ended in March, down 27.5 per cent from the previous year, with sales of 1.84 trillion yen, a 14.8 per cent year-on-year decline.
The combined yearly group sales of Bic Camera and Kojima is more than 1 trillion yen, but is still about half that of Yamada Denki, at well over 2 trillion yen.
Bic Camera's takeover of Kojima should not be seen as the birth of a potential rival to Yamada Denki, but rather as an event that could trigger a new wave of realignment among consumer electronics discount retailers, analysts noted.