Walmart sells majority stake in Japanese grocer Seiyu

by Kim Souza ([email protected]) 521 views 

Walmart’s international portfolio continues to shrink as the Bentonville-based retail giant agreed to sell a majority stake of its Japanese business unit, Seiyu.

The deal was announced Sunday (Nov. 15) with an estimated value of $1.6 billion. Walmart said it will retain 15% of Seiyu selling 65% to KKR, a private venture investor, and 20% to a newly created subsidiary of Rakuten.

Seiyu CEO Lionel Desclee will continue to lead the business through a transition period, after which he will take a new role with Walmart. A new board of directors comprised of representatives from KKR, Rakuten and Walmart will focus on making local decisions and appoint a new CEO.

“This past year has been one of the most extraordinary in Seiyu’s rich 57-year history. Our associates have been exceptional, adapting brilliantly to serve customers at a time when they needed it most,” said Judith McKenna, CEO of Walmart International. “We have been proud investors in this business over the past 18 years and we are excited about its future under the new leadership structure.”

McKenna said this deal brings the “rights partners in the right structure to build the strongest possible local business.”

The transaction is expected to close in the first quarter of 2021 and is subject to regulatory approvals.

KKR said this investment comes from the company’s Asia private equity fund. Hiro Hirano, CEO of KKR Japan, said the company is excited about the deal and working with its partners to leverage their areas of expertise to meet the ever-changing needs of consumers.

“This is a true milestone for KKR in Japan and reinforces our commitment to the market as well as our contouring efforts to champion the long-term success of the local business,” Hirano said.

Seiyu operates more than 300 retail stores in Japan focusing on grocery and hypermarket formats akin to the supercenter formats in Walmart’s U.S. portfolio.

The new business partners said together they aim to support Seiyu’s growth. Last year, Seiyu launched an initiative to accelerate growth through more focus on value, fresh produce and digital convenience for customers. Since then, Seiyu said the company has already met or exceeded its operational and financial goals across key areas of growing market share, customer satisfaction and engagement.

Looking ahead, Seiyu aims to introduce cashless payment options and invest more in digital channels to facilitate app-based shopping and delivery services. The sale of Seiyu does not come as a surprise as Walmart has made no secret of its plans to “right-size this diverse business.” There have been rumors of Walmart looking for a buyer for Seiyu over the past two years, given the market is mature with limited growth potential.

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.

This marks the third major divestiture Walmart international has made in recent months as it pares down its global footprint focusing on more investment in India, China, Mexico and Canada.

Walmart sold Asda, its British supermarket business for $8.8 billion in October to TDR Capital. Walmart kept a small minority stake in the business and expects to take a $2.5 billion loss in fiscal 2021.

Earlier this month, Walmart said it was selling its Argentina business group to Grupo de Narvaez for an undisclosed amount. Walmart also divested majority ownership in its Brazilian subsidiary in 2018. Walmart kept a 20% interest in the Brazilian business and recorded a loss of $4.5 billion.

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