The world’s largest seafood company will grow a little bigger.
Tokyo, Japan-based Maruha Nichiro, with 2019 revenue of USD 7.2 billion (EUR 6.6 billion), announced a tender buyout offer for group company Daito Gyorui Co., Ltd. on 30 March. The purchase price is JPY 1,225 (USD 11.37, EUR 10.43) per share and the buyout period is from 31 March to 21 May.
Maruha Nichiro already owns 50.32 percent of the Tokyo fish wholesaler through subsidiaries. Daito, which is listed on the Second Section of the Tokyo Stock Exchange, is supporting the buyout offer, which would make it a wholly-owned subsidiary. It would then be delisted from the exchange.
Daito operates from an office in the Toyosu Market and is a licensed fish and marine products wholesaler designated by the Tokyo metropolitan government under the Central Market Law. It also has branch offices in other Tokyo-area wholesale markets, including the Ota, Adachi, and Narita markets. One of the Daito’s subsidiaries, Tsukiji Fresh Maruto Co., Ltd., wholesales, processes, and retails seafood in Tokyo. The business of another subsidiary, Maruto Reizo Co., Ltd., located in Hachinohe City, Aomori Prefecture, includes fish processing and cold storage.
Recently business has been poor due to a decrease in catches, declining demand for seafood amid the Westernization of the Japanese diet, an increased percentage of products selling directly to buyers rather than through the markets, and the digitization of global distribution infrastructure.
In its 30 January earnings forecast, the company revised its sales forecast downward by more than 10 percent due to reduced handling of frozen tuna and salmon trout, fluctuations in fishing grounds for fresh fish such as saury, and irregular weather.
Net sales are expected to decrease significantly due to a decline in handling volume due to the worsening procurement environment and a decline in handling unit prices.
Daito has increasingly utilized Maruha Nichiro’s sales network, and has also done processing for it. However, Maruha Nichiro said further cooperation between the two companies created a conflict of interest with minority shareholders, which are also seafood companies, making deeper alignment between the companies difficult to impossible without a buyout. If the deal proceeds, Maruha Nichiro said that amalgamation would continue, along with an increased alignment of the Daito Gyorui’s resource management systems and processes with those of its new parent company.
Maruha Nichiro said it aims to provide a one-stop service performing everything from raw material procurement to creation and distribution of final products, though it admits that the seafood business is moving toward an oligopoly structure of big group companies.
