Walmart (WMT) Selling Stake In Seiyu To KKR And Rakuten

By Amit Chowdhry ● November 16, 2020
  • Walmart Inc (NYSE: WMT) announced it is selling a majority stake in Japan-based supermarket chain Seiyu to KKR and Rakuten for ¥172.5 billion (about $1.6 billion). These are the details.

Walmart Inc (NYSE: WMT) announced it is selling a majority stake in Japan-based supermarket chain Seiyu to KKR and Rakuten for ¥172.5 billion (about $1.6 billion) — which includes debt. Through this deal, KKR will have a 65% stake and Rakuten will have a 20% stake through a newly created subsidiary. And Walmart is going to retain a 15% stake in Seiyu.

This new ownership structure enables Seiyu to take advantage of KKR, Rakuten, and Walmart’s combined retail expertise and innovation as a standalone company for accelerating its digital transformation to further benefit both Seiyu’s customers and business partners. And KKR, Rakuten and Walmart are committed to supporting Seiyu’s growth and this unique ownership structure reflects a shared belief in Seiyu’s long-term strategy in Japan. 

Last year, Seiyu had launched an ambitious strategy to accelerate growth through a more concerted focus on providing value, fresh produce, and digital convenience to customers. And the company has already met or exceeded operational and financial goals across key areas like market share, customer satisfaction, associate engagement, and financial performance. The three companies look to bring complementary strengths to build on Seiyu’s momentum and support its efforts to become Japan’s leading omnichannel retailer.

This new ownership structure builds on previously established collaborations between Rakuten and Walmart, including the Rakuten Seiyu Netsuper online grocery delivery service and Rakuten’s partnership with Walmart — which includes ebook service support in the United States. And Rakuten will further accelerate digital transformation of Seiyu and other Japanese retailers through its new subsidiary Rakuten DX Solution, utilizing its 100 million+ membership base and technology. 

Seiyu CEO Lionel Desclee is going to continue to lead the business through a transition period after which he will take on a new role within Walmart. And 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.

Initially, Walmart bought a 6% stake in Seiyu in 2002. And it gradually increased its stake in Seiyu until a full buyout in 2008. KKR is making the investment from its Asia private equity fund. And the transaction is subject to regulatory approvals and is expected to close in the first quarter of 2021.

KEY QUOTES:

“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 and outperforming against an ambitious transformation plan. 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. 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.”

— Judith McKenna, President and CEO of Walmart International

“KKR is pleased to invest in the success of Seiyu given the important role it plays in the lives of customers across the country. We are also excited by the prospect of working with Seiyu’s associates, who have dedicated themselves to supporting the business in spite of this year’s unprecedented challenges. We will focus on working closely with Seiyu’s management team and associates and leveraging the expertise of Rakuten and Walmart to enhance the customer experience, meet their ever-changing needs, and make shopping more accessible through digitalization. This investment is a true milestone for KKR in Japan and reinforces our commitment to the market as well as our continuing efforts to champion the long-term success of local businesses.”

— Hiro Hirano, Co-Head of Asia Pacific Private Equity and CEO of Japan at KKR

“By building on our successful partnership on Rakuten Seiyu Netsuper and our deep experience in online retail and data-based marketing, we look forward to accelerating digital transformation of Seiyu brick and mortar retail and further merging the best of offline and online retail to offer Seiyu customers the best possible OMO1 customer experience. The planned establishment of Rakuten DX Solution will also allow us to offer digital solutions optimized to transform retail at Seiyu and in new future partnerships with retailers across Japan.”

— Kazunori Takeda, Group Executive Vice President and President of Commerce Company, Rakuten