JAPAN’S Yamada Holdings and Edion said on Thursday that they plan to merge, aiming to create a giant consumer electronics chain with combined sales of around $16 billion.
The boards of both companies will meet on Friday to review the proposal. They did not disclose the terms of the merger.
A deal would consolidate Yamada’s position as Japan’s leading electronics retailer, as the sector grapples with e-commerce competition and a shrinking population.
Shares in Edion surged 11 percent in Tokyo morning trade while Yamada’s shares climbed 3.5 percent.
Japan’s electronics retailers are known for their large colorful stores that sell everything from phones, game consoles and home appliances to stationery. A portion of their sales are returned to customers via points.
According to the Nikkei newspaper, the two companies plan to set up a holding company under which Yamada and Edion would operate, seeking to leverage scale to enhance their product line-ups and focus on developing their private-label offerings.
The merger could face antitrust hurdles, particularly in western Japan, where the companies’ store networks overlap.
If the merger is realized, it would be the industry’s largest restructuring since 2012 when Yamada Denki, Yamada Holdings’ predecessor, took control of Best Denki and Bic Camera took control of Kojima.
In the last financial year, Yamada, which has a market capitalization of $3.7 billion, saw net profit slump 45 percent to 14.8 billion yen on sales of 1.7 trillion yen.
Edion reported profit grew 9.5 percent to 15.5 billion yen on sales of 794 million yen.