FamilyMart signs intent to swallow smaller Nikomart

Taiwan FamilyMart Co (全家便利商店) and smaller rival Taiwan Nikomart Co (福客多) yesterday inked a letter of intention for the former to acquire operational rights to Nikomart, paving the way for the latter's withdrawal from the market.

Nikomart's headquarters will become a corporate franchisee under FamilyMart -- the nation's second-largest convenience-store (CVS) chain operator -- to help its own franchisees transfer to FamilyMart's system, a statement filed by FamilyMart to the Taiwan Stock Exchange yesterday said.

The announcement was made after the stock market closed. Shares of Taiwan FamilyMart were down NT$1.1 to NT$54.4 yesterday; Taiwan Nikomart is not listed.

Esther Lin (林翠娟), public relations manager at FamilyMart, said that all 300 Nikomart stores would be sporting new signs before the end of the year.

Rumors of Nikomart being acquired by FamilyMart had circulated for a long time, but both companies had denied it.

Established in 1990, Nikomart, the nation's fifth-largest CVS chain, is 50 percent controlled by Taisun Enterprise Co (泰山企業), a food manufacturing giant.

Taisun Enterprise also has a 20 percent stake in FamilyMart, which has more than 2,030 outlets nationwide.

The two CVS chains launched a cooperation agreement in 2000, working together on promoting their electronics business, fresh foodstuff supply and books and magazine distribution.

Given its small scale, Nikomart has had difficulty turning its operations around. It posted a loss of more than NT$200 million (US$6 million) last year, or a loss per share of NT$5.2.

In August 2005, Nikomart unveiled a new corporate identity in hopes of giving the business a fresh image and repositioning itself as a metropolitan CVS operator.

However, its strategy failed in the face of strong competition from rivals such as President Chain Store Corp (統一超商), which operates more than 4,500 stores.