Lawson buys am/pm: restructuring looms over Japanese convenience store chains

For eight years in a row, revenues have been dropping for Japan's convenience store industry. The country is nearing saturation with something like 45,000 locations nationwide, and people in the industry have seen the writing on the wall for some time. Eventually there would have to be some consolidation because smaller chains (those with only a one or two thousand locations) are susceptible to the majors who can fund multiple shop openings in key areas to drain sales from weaker rivals.

So it was no surprise last week when Japan's second-largest operator, Lawson, announced that it had come to terms with am/pm to purchase and then merge with the smaller company. Lawson will take am/pm on as a subsidiary at the end of this month, and the full scale merger is expected sometime during the summer of 2010.

While this is noteworthy in an of itself, the real M&A drama is probably just beginning.