Mitsubishi to raise Lawson stake in 144b yen deal

[TOKYO] Mitsubishi Corp plans to raise its stake in Lawson Inc. in a 144 billion yen (S$2 billion) tender offer and to turn Japan's third-largest convenience store operator into a unit.

The diversified trading company, Japan's largest by market value, will offer 8,650 yen a share to increase its holding in Lawson to 50 per cent from 33.4 per cent stake, the companies said in statements Friday.

The offer is 17 per cent higher than Lawson's closing share price Wednesday, before the prospect of a deal was reported. The stock rose 0.5 per cent to 7,970 yen as of the 11:30am trading break in Tokyo Friday.

The acquisition gives Mitsubishi a bigger slice of Lawson's profit, which is expected to jump about 17 per cent to 36.8 billion yen in the year ending February 2017, after two years of decline, according to analyst estimates.

More support from Mitsubishi is a plus for Lawson's expansion as well as supply chain and distribution, said Makoto Sakurai, an analyst at Mitsubishi UFJ Morgan Stanley Securities Co.

Lawson would support the tender offer, it said Friday in the statement. Mitsubishi intends to start buying the shares in January, according to the statement.

Japan's biggest convenience store operators have been growing by buying up rivals in and outside the country, with Lawson saying in June it was looking to buy other chains in the US as it speeds up overseas expansion.

Hurt by downturns in its energy and metals businesses, Mitsubishi reported a net loss of 149.4 billion yen last fiscal year. The company aims to diversify away from commodities over the next three years to assure that they don't post another net loss, chief financial officer Kazuyuki Masu said in an interview last month.

Lawson, which operates about 12,600 stores in Japan and about 930 outside the country, is targeting an increase to 1,000 overseas shops by February 2017.

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