Major telecom carrier KDDI is planning to raise its stake in Lawson to 50% to jointly run the convenience chain with the aim of taking advantage of the latter’s nationwide retail store network and customer base while offering technology to transform its business model, the two firms said Tuesday.

KDDI currently holds 2.1% of Lawson shares but will invest about ¥500 billion ($3.4 billion) to increase its stake through a tender offer that will likely start around April and finish in September. If the deal is realized, KDDI will manage Lawson with trading house Mitsubishi Corp., which now holds 50.1% of Lawson stake, and will take the convenience chain private.

The move could benefit both firms, as KDDI — Japan’s second-largest mobile carrier in terms of the number of subscribers — would be able to expand its own economic clout to attract and retain users. Lawson, which is the third-largest chain of convenience stores in terms of the number of outlets, aims to integrate KDDI’s technology to improve services at its stores and tap the online shopping market.

“We believe convenience stores are critical social infrastructures. By fully integrating our communication and digital transformation technologies … we hope to provide new values and services to customers,” said KDDI President Makoto Takahashi during a joint news conference with Mitsubishi and Lawson.

According to KDDI, several joint projects under consideration include selling Lawson’s items at KDDI’s shops run under its au brand, while Lawson could introduce KDDI’s mobile communication services and sell smartphones at its convenience stores, as well as offer remote consulting services on finance and insurance.

Given that Lawson boasts about 14,000 convenience stores across Japan, it will significantly increase physical touch points for KDDI customers, as the telecoms giant currently operates about 2,200 stores.

“It would be one of the key points to distinguish us (from the rival carriers) if Lawson becomes friendlier to KDDI users,” Takahashi said in an interview with TV Tokyo aired on Tuesday evening.

For Lawson, stronger backing from KDDI will give it a technological boost amid its efforts to expand its online presence.

Lawson President Sadanobu Takemasu shared his vision of having Lawson convenience stores become distribution centers for its online shopping services, making it possible to send daily items to customers in 15 minutes.

“Using speed as our strength, we will be seriously committed to compete in the e-commerce sector,” Takemasu said, adding that Lawson is also keen to utilize digital technology to enhance the services and efficiency of its stores.

“From now on, technology will be sustaining everything,” so KDDI’s backing will be a great help to enhance convenience stores’ business models, he said.

Takemasu added that Lawson was also keen to cultivate more overseas customers with a new type of tech-powered convenience store.

Mitsubishi became a major shareholder of Lawson in 2000 and made the convenience chain its subsidiary in 2017 by taking a majority stake.

Leveraging its procurement ability as a trading house, Mitsubishi has strengthened Lawson’s product lineup, especially its food items.

But Lawson has been facing competition not just from its direct rivals, such as 7-Eleven and FamilyMart, but also other retailers such as drug stores that sell daily goods.

“We were actually wondering what more (Mitsubishi) could do to support Lawson,” said Mitsubishi President Katsuya Nakanishi during Tuesday’s news conference.

In the end, Mitsubishi concluded that a new partner was needed and went on to approach KDDI, he said.

KDDI and Lawson began their capital tie-up in 2019 when the carrier purchased its 2.1% stake.

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