Tapping a growth field: Sompo Japan to buy nursing care provider from eatery chain

Tapping a growth field: Sompo Japan to buy nursing care provider from eatery chain

TOKYO — Insurance group Sompo Japan Nipponkoa Holdings plans to acquire a nursing care unit of restaurant operator Watami for about 21 billion yen ($173 million).

     Sompo Japan will complete the acquisition as early as December to make Watami no Kaigo a wholly owned subsidiary. The board will formally approve the purchase at a meeting Friday.

     Watami no Kaigo operated 111 nursing homes in the Tokyo metropolitan area as of March 31 in addition to offering day care. Sompo Japan intends to maintain existing services and will in principle retain some 7,000 staff members, including part-timers. But the unit’s name will be changed.

     Sompo Japan has been focusing on the nursing care segment as it tries to build a new revenue source besides its mainstay insurance business. The insurer acquired a 34% stake in midtier nursing care provider Cedar back in 2012 before buying 3.5% of major player Message this past March. Having accumulated know-how in the field, Sompo Japan saw an environment ripe for it to run its own facilities.

     Watami no Kaigo took in revenue of 35.4 billion yen for the fiscal year ended March, down 7% on the year, posting a net loss of 1.1 billion yen. The occupancy rate at live-in facilities has been declining of late. Sompo Japan intends to revamp operations through such steps as training and improved personnel management.

     Watami had sought to unload the nursing care unit under pressure from lenders to improve its finances. The company will now focus on its mainstay operations of restaurants and meal delivery.

(Nikkei)

Tapping a growth field: Sompo Japan to buy nursing care provider from eatery chain