Walmart sells majority stake in Seiyu, nearly exiting Japan
TOKYO - Walmart Inc is selling a majority stake in Japanese supermarket chain Seiyu to investment firm KKR and e-commerce company Rakuten for over $1 billion, after years of struggling to make money amid stiff competition.
The deal, which values Seiyu at 172.5 billion yen, comes after on-off speculation about the U.S. retail giant looking to exit Japan. It is well below the 300-500 billion yen it reportedly sought a few years ago.
KKR will buy 65 per cent of Seiyu while Rakuten, which already has an online venture with the chain, will acquire a 20 per cent stake. Walmart will retain 15 per cent, the companies said in a joint statement on Monday.
The world’s biggest retailer first entered the Japanese market in 2002 by buying a six per cent 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 and Carrefour SA who were lured by the high spending power of Japanese consumers but were frustrated by tough competition.
Some analysts said Walmart, while failing to make much money in Japan, had done better than other foreign retailers considering it saved money-losing Seiyu from bankruptcy by cutting costs and improving private brand sales.
“Walmart was always going to struggle, because they had to turn around the business and also they needed to grow volume to really have a viable share in the Japanese market and the only way to do that was through more acquisitions, which it wasn’t willing to spend money on,” said Roy Larke who special is es in Japan’ s retail industry at Japanese Consuming.