Retailer pulling back from the Japanese market
The deal, announced Monday, values Seiyu at ¥172.5 billion (about $1.6 billion) and will leave Walmart with a 15% stake in the Japanese supermarket chain. Walmart made its initial investment in Seiyu in 2002 and acquired a majority stake, making Seiyu a Walmart subsidiary, in 2005.
Walmart said it remains committed to supporting Seiyu’s growth and adds that the new ownership structure will allow the chain to accelerate its digital transformation.
“We have been proud investors in this business over the past 18 years, and we are excited about its future under the new ownership structure,” Walmart International president and CEO Judith McKenna. “Today’s announcement is important because its focus is on bringing together the right partners in the right structure to build the strongest possible local business. We look forward to supporting Seiyu’s growth and success, alongside KKR and Rakuten, as a minority investor.”
Last year, Seiyu launched an ambitious strategy to accelerate growth through a more concerted focus on providing value, fresh produce and digital convenience to customers. Walmart said the company has already met or exceeded its operational and financial goals across key areas, including market share, customer satisfaction, associate engagement and financial performance.
Walmart said KKR and Rakuten’s investment in Seiyu is further intended to deliver a range of substantial benefits over time for the Company’s customer base, including:
- Accelerated investment in digital channels to facilitate app-based shopping, payment and delivery services;
- Introduction of new options for cashless payment;
- Improved service experience across both online and offline channels; and
- Enhanced product offering at everyday low prices to stay ahead of its customers’ shopping needs.
KKR will bring its deep expertise in the Japanese market to Seiyu, in addition to its decades-long track record of investing in the subsidiaries of large corporations and empowering them to unlock their potential as successful, independent companies, Walmart said. KKR will further leverage its sector and operational expertise to enhance Seiyu’s retail transformation efforts and will make available its network of advisors, portfolio companies and specialists to create value.
The new ownership structure also builds on previously established collaborations between Rakuten and Walmart, including the Rakuten Seiyu Netsuper online grocery delivery service in Japan and ebook service support in the United States. Rakuten will further accelerate the digital transformation of Seiyu and other Japanese retailers through its new subsidiary Rakuten DX Solution.
Seiyu will continue to have access to Walmart’s global retail best practices, sourcing network and scale to maintain the price leadership and value it provides to customers, Walmart said.
Seiyu CEO Lionel Desclee will continue to lead the business through a transition period, after which he will take on a new role within Walmart. A new Board of Directors comprised of representatives from KKR, Rakuten and Walmart will be formed to focus decision making locally and plans to appoint a new CEO following the close of the transaction.
KKR is making its investment from its Asia private equity fund. The transaction is subject to regulatory approvals and is expected to close in the first quarter of 2021.