Duo merge to create massive chain

Japanese video rental and sell-through giant Culture Convenience Club has announced a tie-up with rival Shinseido that will create the country’s largest CD and DVD retail chain.

CCC will buy ¥1.15 billion ($9.9 million) in newly issued shares to take a 14.9% take in Shinseido. It also will cooperate with its new partner in store management, IT systems and marketing.

If Shinseido shareholders give their approval at the upcoming May meeting, CCC also will take a share warrant giving it the option to boost its stake to as high as 48.7% over the next three years.

As of the end of February, CCC operated 1,251 stores in its Tsutaya chain, of which 878 were selling DVDs and CDs, with sales volume totaling $680 million in fiscal 2004.

Shinseido manages a nationwide chain of 270 stores, of which 230 sell DVDs and CDs retail; 2004 sales amounted to $565.5 million.

Together, CCC and Shinseido will have a total of 1,100 stores selling DVDs and CDs, with projected annual sales of $1.293 billion, dwarfing the local competition.

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