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Japans Nitori weighs rival bid in takeover of furniture retailer | FURNTR
Japans Nitori weighs rival bid in takeover of furniture retailer

TOKYO -- Japanese furniture retailer Nitori Holdings is considering acquiring industry peer Shimachu, Nikkei has learned, just as rival DCM Holdings is in the process of taking over the target.

DCM looks to convert Shimachu into a fully owned subsidiary through a tender offer between Oct. 5 and November 16. Valued at roughly 160 billion yen ($1.5 billion), the deal prices shares at 4,200 yen apiece.

Shimachu says it supports DCM's buyout, meaning Nitori's bid would amount to a hostile challenge. But Nitori had 233 billion yen in funds on hand at the end of August, giving the company plenty of ammunition to mount a bidding war.

DCM meanwhile only had 74.6 billion yen in funds on hand at the end of August, and the company is financing the takeover of Shimachu chiefly through debt.

A Nitori executive declined to comment about plans to acquire Shimachu.

While Nitori stores sell furniture, Shimachu runs home improvement centers that also sell furnishings and interior accessories. DCM operates home improvement centers as well.

Earnings at each company have surged on stay-at-home demand fueled by the coronavirus pandemic. Both Nitori and DCM posted record profits in the March-August half. Shimachu's black ink gained during the fiscal year that ended in August.

However, the domestic market for furniture and interior goods has matured. If the stay-at-home demand subsides, industry rivals will likely descend into cutthroat competition once again.

Because of Japan's graying population, outlets face harsher business environments the further away they are from cities, analysts say. Both Nitori and DCM look to take over a rival while earnings are healthy.

Shimachu spans about 60 locations, mainly in the Tokyo and Saitama areas. Nitori holds 559 furniture stores nationwide, with another 67 outlets overseas. DCM is Japan's second-largest home improvement chain in sales after Cainz.

https://asia.nikkei.com/

News Writer : Selma SEZGİN

313 viewed times. / 25-10-2020 added.