Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Over the weekend there was an article in the Nikkei saying that <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha Holdings (3391 JP)</a> and <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia Holdings (3141 JP)</a> were considering a merger. Other media outlets followed.</li>
<li>This has been a possible outcome. <a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">Aeon Co Ltd (8267 JP)</a> owns 51% of Welcia, 13.6% in Tsuruha, and is negotiating to buy another 13% in Tsuruha from Oasis.</li>
<li>This would create a behemoth. ¥2.2trln in revenues vs ¥1trln for <a href="https://www.smartkarma.com/entities/matsukiyococokara-co" target="_blank" data-smartkarma-citation="entities:2259:1" rel="noopener">MatsukiyoCocokara (3088 JP)</a>. It would be 25% of the market. Questions will be asked about concentration. </li>
</ul>


Over the weekend there was an article in the Nikkei saying that Tsuruha Holdings (3391 JP) and Welcia Holdings (3141 JP) were considering a merger. Other media outlets followed.
This has been a possible outcome. Aeon Co Ltd (8267 JP) owns 51% of Welcia, 13.6% in Tsuruha, and is negotiating to buy another 13% in Tsuruha from Oasis.
This would create a behemoth. ¥2.2trln in revenues vs ¥1trln for MatsukiyoCocokara (3088 JP). It would be 25% of the market. Questions will be asked about concentration. 


Tsuruha (3391) And Welcia (3141) - Aeon Tsuruha Stake Buy Followed by Merger?

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">Aeon Co Ltd (8267 JP)</a> owns 13% of <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha Holdings (3391 JP)</a>. Oasis owns 13% too. Oasis ran a governance campaign but lost last summer's AGM. Aeon supported Tsuruha.</li>
<li>Tsuruha shares popped in November when Tsuruha said it was looking at its strategic options. BBG reported PE firms were circling. Now Aeon wants to buy Oasis' stake. </li>
<li>That would put Aeon in a near-blocking position without consolidating. And it would mean minorities stayed minorities. The real question is whether this is what Tsuruha wants.</li>
</ul>



Aeon Co Ltd (8267 JP) owns 13% of Tsuruha Holdings (3391 JP). Oasis owns 13% too. Oasis ran a governance campaign but lost last summer's AGM. Aeon supported Tsuruha.
Tsuruha shares popped in November when Tsuruha said it was looking at its strategic options. BBG reported PE firms were circling. Now Aeon wants to buy Oasis' stake. 
That would put Aeon in a near-blocking position without consolidating. And it would mean minorities stayed minorities. The real question is whether this is what Tsuruha wants.


Aeon (8267) Wants To Buy a Bigger Stake in Tsuruha (3391); What Does Tsuruha Want?

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

<ul>
<li>Tsuruha sees itself as another recent victim of activist fund pressure. </li>
<li>The No. 2 drugstore chain has grown successfully over the past decade and today has the widest store coverage of any chain in its sector.</li>
<li>This summer Aeon supported activists’ demand for strategic change. Tsuruha thinks the only way it can keep its independence may be to take the company private – Aeon probably agrees.</li>
</ul>


Tsuruha sees itself as another recent victim of activist fund pressure. 
The No. 2 drugstore chain has grown successfully over the past decade and today has the widest store coverage of any chain in its sector.
This summer Aeon supported activists’ demand for strategic change. Tsuruha thinks the only way it can keep its independence may be to take the company private – Aeon probably agrees.


<ul>
<li>The drugstore space in Japan is super-interesting. The stories, the mergers, the activists. And of course, the defence against activists.</li>
<li>In Feb-2024, Aeon did a deal with an activist to cause a future deal between Tsuruha and Welcia. Aeon also owns a stake in <a href="https://www.smartkarma.com/entities/kusuri-no-aoki-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:27329:1" rel="noopener">Kusuri no Aoki Holdings (3549 JP)</a>. </li>
<li>The Aoki brothers (CEO and VP) exercised warrants in August and re-arranged their holdings. Now the family owns 34.7%. Today, after Q1 earnings, the company announced a 5+% buyback.</li>
</ul>


The drugstore space in Japan is super-interesting. The stories, the mergers, the activists. And of course, the defence against activists.
In Feb-2024, Aeon did a deal with an activist to cause a future deal between Tsuruha and Welcia. Aeon also owns a stake in Kusuri no Aoki Holdings (3549 JP). 
The Aoki brothers (CEO and VP) exercised warrants in August and re-arranged their holdings. Now the family owns 34.7%. Today, after Q1 earnings, the company announced a 5+% buyback.


Kusuri No Aoki (3549) Big Buyback - Accretive, And May Involve Musical Shares

Thematic (Sector/Industry)

<ul>
<li>Core inflation rates remain stubbornly high and real wages are still falling. </li>
<li>Surveys suggest one more major round of price hikes in October but the government still thinks prices will stabilise below its 2% target by the end of the year.</li>
<li>The increases are lowering consumer confidence – bad news for most retailers, although major discount chains are making hay while the sun, well, doesn’t shine.</li>
</ul>


Core inflation rates remain stubbornly high and real wages are still falling. 
Surveys suggest one more major round of price hikes in October but the government still thinks prices will stabilise below its 2% target by the end of the year.
The increases are lowering consumer confidence – bad news for most retailers, although major discount chains are making hay while the sun, well, doesn’t shine.


Japanese Prices Rise Again; 60% of Consumers Feeling the Pinch and Looking for Better Value

Japan

TSURUHA HOLDINGS INC. is a holding company which manages subsidiaries that operate drug stores in Hokkaido and the Tohoku area.  The Company's product line includes drugs, cosmetics, and household utensils.

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Tsuruha Holdings (3391 JP)

Tsuruha (3391) And Welcia (3141) - Aeon Tsuruha Stake Buy Followed by Merger?

Over the weekend we have news suggesting Aeon is pushing Tsuruha and Welcia towards a merger after buying Oasis' Tsuruha stake. Both stocks are up....

Travis Lundy

Aeon (8267) Wants To Buy a Bigger Stake in Tsuruha (3391); What Does Tsuruha Want?

Aeon today said it was negotiating to buy activist Oasis' 13% stake in Tsuruha. Aeon wants to own a dominant position in drug stores. It could. The...

Travis Lundy

Tsuruha: What Next: Go Private or Aeon?

Tsuruha considers going private to maintain independence amid activist fund pressure and support from Aeon, with various funds seemingly keen to...

Michael Causton

Kusuri No Aoki (3549) Big Buyback - Accretive, And May Involve Musical Shares

Activist-pressured Kusuri no Aoki reports Q1 earnings and a 5+% buyback. The seller could be a cross-holder after the Aoki brothers upped their...

Travis Lundy

Japanese Prices Rise Again; 60% of Consumers Feeling the Pinch and Looking for Better Value

Japanese consumer markets have three big trends: higher prices/squeezed incomes, doubling of single households and more people feeling the pinch....

Michael Causton

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Tsuruha (3391) And Welcia (3141) - Aeon Tsuruha Stake Buy Followed by Merger?

Over the weekend we have news suggesting Aeon is pushing Tsuruha and Welcia towards a merger after buying Oasis' Tsuruha stake. Both stocks are up....

Travis Lundy

Aeon (8267) Wants To Buy a Bigger Stake in Tsuruha (3391); What Does Tsuruha Want?

Aeon today said it was negotiating to buy activist Oasis' 13% stake in Tsuruha. Aeon wants to own a dominant position in drug stores. It could. The...

Travis Lundy

Tsuruha: What Next: Go Private or Aeon?

​Tsuruha considers going private to maintain independence amid activist fund pressure and support from Aeon, with various funds seemingly keen to...

Michael Causton

Kusuri No Aoki (3549) Big Buyback - Accretive, And May Involve Musical Shares

Activist-pressured Kusuri no Aoki reports Q1 earnings and a 5+% buyback. The seller could be a cross-holder after the Aoki brothers upped their...

Travis Lundy

Japanese Prices Rise Again; 60% of Consumers Feeling the Pinch and Looking for Better Value

Japanese consumer markets have three big trends: higher prices/squeezed incomes, doubling of single households and more people feeling the pinch....

Michael Causton

Tsuruha considers going private to maintain independence amid activist fund pressure and support from Aeon, with various funds seemingly keen to...