The Pacific Construction Co (
"We decided to sell the property due to financial difficulties," Shen Pei-ling (
Although Far Eastern now owns the 16,000-ping building, Shen said the group will take over rental payments to the landlord of the property, the Liukung Farmland Irrigation Association (
Pacific Sogo's vice president, Lee Kuang-rong (
Pacific Construction went into debt early last year after continued declines in its construction business. It sold over half of its shares in the five outlet Pacific Sogo Department Store (太平洋崇光百貨) -- a cash cow that generated NT$28 billion in 2001 and NT$27 billion last year -- to the Far Eastern Group last October for NT$2.5 billion. Pacific Construction retains a 12 percent share in Sogo.
Sogo's Chunghsiao East Road flagship store generates the highest revenues among all Pacific Sogo branches, with NT$15 billion per year in sales, 60 percent of Sogo's total revenue.
The move made the Far Eastern Group, owner of nine Far Eastern Department Stores (遠東百貨), the largest department-store operator in Taiwan, surpassing Shin Kong Mitsukoshi Department Store (新光三越), which operates 10 stores.
Far Eastern now has a total of 16 stores.
Late last year Far Eastern allegedly stopped paying rent on the Chunghsiao East Road Sogo facility, which amounts to NT$600 million per month, in an apparent attempt to force Pacific Construction to sell, Shen said. The failure to pay rent was solved last Friday, Shen added.
A market watcher said the deal will help Far Eastern Group better integrate its department-store business.
"The merger of Sogo [with Far Eastern] will help renew Far Eastern Department Stores' seemingly outdated image," an associate manager at Marbo Securities Consultant Co (萬寶證券) said yesterday.
As of June 22, Far Eastern Department Stores's sales dropped by 5 percent,or NT$35 million, from the same period of last year, the company said in a statement to the Taiwan Stock Exchange Corp yesterday.
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