Just a few hours ago Takashimaya Department Stores and H20 Retailing announced a capital alliance that is expected to lead to a full-on merger three years from now.
According to reports in Japanese newspapers, the alliance will kick off with the two purchasing 10% of each others' stock. The two will begin efforts to combine sourcing and logistics immediately.
Together, Takashimaya and H20--itself the result of a 2007 merger between Hankyu and Hanshin department stores--will have revenues of 1.5 trillion yen, making it the second largest department store group in Japan, following Mitsukoshi-Isetan, which joined forces less than six months ago.
Sales have been falling steadily at Japan's department stores for more than a decade as consumers have shifted spending to other channels such as specialty retailers and shopping centers. As a result, M&A activity has been hot and heavy as department store chains have sought efficiencies and safety in size.
In recent years, Takashimaya had the highest annual revenues of any single chain, and perhaps, hoping to maintain its status and independence, the retailer remained the last holdout amongst Japan's largest chains. Industry experts have been speculating for some time as to when the company might join the merger melee.
