Walmart Offloads 85% Stake In Japanese Retailer Seiyu To KKR, Rakuten

Walmart Inc WMT has sold a majority of its stake in the Japanese supermarket chain Seiyu to investment firm KKR & Co, Inc KKR and local e-commerce conglomerate Rakuten Inc RKUNY in a $1.65 billion (JPY 172.5 billion) deal.

What Happened: KKR will acquire a 65% stake in Seiyu and Rakuten will get a 20% share in the retailer through a newly-created subsidiary focused on retailer digital transformation. Walmart will retain a 15% stake in Seiyu, the companies said in a statement Sunday.

Seiyu CEO Lionel Desclee will remain at the helm through the transition period, following which he is expected to take a new role at Walmart.

A new board of directors — made up of representatives from KKR, Rakuten, and Walmart — will be formed and subsequently appoint a new CEO after the close of the transaction. 

KKR made the investment from its Asia private equity fund. The deal is expected to close in the first quarter of 2021, subject to regulatory approvals.

Why It Matters: Walmart’s foray into Japan dates back to 2002 when it purchased a 6% stake in Seiyu. The Arkansas-based retailer fully took over Seiyu in 2008, Reuters reported.

The U.S. retail behemoth reportedly struggled in Japan due to fierce competition and was looking to sell Seiyu two years ago, for between JPY 300 billion to JPY 500 billion, but couldn't find a buyer at the time.

Last year, Walmart said it was looking to exit Japan and that it wanted to take Seiyu public but retain a majority in the business.

Price Action: Walmart shares closed nearly 1.6% higher on Friday at $150.54 and rose 0.57% in the after-hours session. On the same day, KKR shares closed almost 2.5% higher at $37.51 and gained 0.21% in the after-hours session.

Rakuten OTC shares closed 1.74% higher at $10.53.

Photo by Daniel Case on Wikimedia