UK-based Orbis Investments is rallying opposition against the planned merger between Japan’s two largest drugstore chains, Tsuruha Holdings and Welcia Holdings. The investment firm, which holds nearly 10% of Tsuruha, has vowed to vote against the deal at the May 26 shareholders meeting.
Orbis claims the proposed merger ratio undervalues Tsuruha and criticizes Aeon’s planned tender offer of ¥11,400 ($79) per share to increase its stake in the combined entity to 50.9%. This price represents a substantial discount to the ¥15,500 per share Aeon paid when it acquired a 13% stake from Oasis Management in March 2024.
The dispute highlights tensions between profitability and scale in Japan’s consolidating drugstore industry. Tsuruha reported a 4.5% operating profit margin for the fiscal year ended February 2025, significantly higher than Welcia’s 2.8%. Orbis believes a fair control premium could push the valuation to around ¥20,000 per share.
The proposed merger requires two-thirds shareholder approval, giving Orbis significant blocking power if it can rally additional investors. If combined, the two chains would create Japan’s largest pharmacy with annual revenue exceeding ¥2 trillion, more than double the size of third-place competitor MatsukiyoCocokara.
The showdown represents a test case for Japan’s corporate governance reforms, with Orbis urging Tsuruha’s board to solicit competing bids and criticizing the creation of another parent-subsidiary listed relationship.
