TOKYO (Reuters) - Walmart Inc (N:WMT) is selling a majority stake in Japanese supermarket chain Seiyu to investment firm KKR (N:KKR) and e-commerce company Rakuten (T:4755) for over $1 billion, after suffering years of poor profitability amid stiff competition.
The deal, which values Seiyu at 172.5 billion yen ($1.65 billion) including debt, comes after on-off speculation about the world's biggest retailer looking to exit Japan. It is below the 300-500 billion yen it reportedly sought a few years ago.
KKR will buy 65% of Seiyu and Rakuten will acquire a 20% stake while Walmart will retain 15%, the companies said in a joint statement on Monday.
Walmart first entered the Japanese market in 2002 by buying a 6% stake in Seiyu, and gradually built up its stake before a full takeover in 2008.
But it has struggled in Japan, like other foreign entrants such as Tesco PLC (L:TSCO) and Carrefour SA (PA:CARR) who were lured by the high spending power of Japanese consumers but were frustrated by tough competition.
Walmart Japan, mainly the Seiyu business, booked a net profit of 47 million yen in 2019 after reporting losses in most previous years. Seiyu told Reuters earlier this year that the coronavirus pandemic had bolstered interest in online grocery shopping in Japan.
For Rakuten, the deal with Seiyu helps it compete against rival Amazon (O:AMZN). Large Japanese supermarkets such as Aeon Co Ltd (T:8267) and Seven & I Holdings Co Ltd's (T:3382) Ito-Yokado have also been stepping up their investments in e-commerce as Japanese consumers, long wary of buying food online, are starting to use online grocery services.
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