Walmart sells majority stake in Seiyu, cutting presence in competitive Japanese market
Walmart is selling a majority stake in Japanese supermarket chain Seiyu for over $1 billion, after years of struggling to make money amid stiff competition, Reuters reports.
The deal with investment firm KKR and e-commerce company Rakuten reportedly comes amid speculation that the U.S. retail giant is looking to exit Japan.
The transaction, which values Seiyu at 172.5 billion yen ($1.65 billion), marks a sharp drop in the 300-500 billion yen Walmart reportedly sought a few years ago.
KKR will buy 65% of Seiyu while Rakuten, which already has an online venture with the chain, will acquire a 20% stake. 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, according to Reuters, it has struggled in Japan, like other foreign entrants such as Tesco and Carrefour 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.
Foreign-owned supermarkets have also been struggling in the Chinese market over recent years.