26-05-2025
Tsuruha shareholders approve future merger with rival drugstore Welcia
Shareholders of major Japanese pharmacy chain Tsuruha on Monday approved all proposals presented at the day's general shareholders meeting, including one on a stock swap with rival Welcia for a future merger.
Tsuruha, based in Sapporo, has announced it will integrate its operations with Welcia, the biggest force within the Japanese pharmacy industry, in December.
Under the planned merger, announced in April, Tsuruha will make Welcia a wholly-owned subsidiary through an equity swap. Japanese retailer Aeon, which is Welcia's parent company, will then make Tsuruha a consolidated subsidiary through a tender offer.
According to Tsuruha, around 100 people attended the shareholders meeting held in Sapporo.
Orbis Investments, a British asset management company that owns a stake of about 10% in Tsuruha and opposes Tsuruha's merger proposal, said that although it is in support of an industry shakeout, there are issues with the decision-making part of the proposal.
Some shareholders questioned the company on the management's independence after the merger goes through.
A shareholder said that an explanation was provided to shareholders by Tsuruha's management during the meeting that the company will maintain its independence while adopting positive features of the deal, including Aeon's know-how.
"I've decided to believe those words," the shareholder said.
Voicing immense disappointment, an Orbis official who attended the meeting said that neither the proposed stock swap nor the suggested tender offer fairly represent Tsuruha's business values.
Critical voices from Orbis and other investors reflect rising shareholder activism in Japan in recent years as the country's governance reforms embolden investors. Their disappointment in the planned deal centers around the perceived low premium it would pay to Tsuruha shareholders.
Aeon, the country's largest supermarket chain operator, last month said it will launch a tender offer to make Tsuruha a consolidated subsidiary at ¥11,400 per share as it tightens its grip on the drugstore market.
Orbis has said the deal is flawed and will allow Aeon to take a controlling stake in Tsuruha on "outrageous terms,' according to the asset manager's presentation document.
The deal is unfair, Orbis argues, given that Aeon paid ¥15,500 per share when it bought a 13.6% stake from activist fund Oasis Management in February 2024.
Aeon has said in a statement that synergies from the planned integration should benefit all stakeholders, including Tsuruha shareholders.
