Japan: KKR and Rakuten acquiring Walmart’s Seiyu

Charles Chan
Senior Retail Analyst
@RetailAnalysis

Date : 16 November 2020

Walmart, KKR and Rakuten have signed an agreement that will change the ownership structure of Seiyu in Japan.

New ownership structure

In a deal worth JPY172.5bn (approx. US$1.6bn), KKR will acquire 65% majority stake in Seiyu, Rakuten will acquire a 20% stake, through a newly created subsidiary, and Walmart will retain 15%. The transaction is subject to regulatory approvals and is expected to close in the first quarter of 2021. The announcement follows recent divestments in Argentina, UK and Brazil as Walmart looks to refocus its attention on its core markets.

Accelerating omnichannel and digital transformation

The new ownership structure enables Seiyu to take advantage of KKR, Rakuten and Walmart’s combined retail expertise and innovation as a standalone company and accelerate its digital transformation to further benefit both Seiyu’s customers and business partners.

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.

Rakuten and Walmart building on their existing partnership

Since partnering in early 2018, Walmart and Rakuten have launched Rakuten Seiyu Netsuper, worked closely in growing Seiyu’s online business and tested innovative last-mile solutions. KKR and Rakuten’s investment in Seiyu is expected to place greater focus on digital channels to facilitate app-based shopping, payment (including new options for cashless) and delivery services. Seiyu will continue to tap into Rakuten’s ecosystem of over 100m members, and expertise in logistics and technology. It will also continue to have access to Walmart’s global retail best practices, sourcing network and scale to maintain its everyday low price position.

New Seiyu CEO after transition

A new Board of Directors comprised of representatives from KKR, Rakuten and Walmart will be formed. Seiyu’s CEO, Lionel Desclee, will continue to lead the business through a transition period. He will then take on a new role within Walmart, and a new CEO will be appointed when the close is completed.  

Bringing together the right partners in the right structure

Judith McKenna, President and CEO of Walmart International, said, “This past year has been one of the most extraordinary in Seiyu’s rich 57-year history [...] 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.”

Walmart retreating in Japan, consolidating in India, but strong in China

Walmart’s performance and investment in Asia has been mixed. In Japan, speculation that Walmart was looking to sell Seiyu surfaced two years ago. Having entered the market in 2002, it has struggled to compete with local and regional supermarkets – similar to the likes of Carrefour and Tesco, exited Japan in 2005 and 2011 respectively.  

In India, Walmart has seen slow progress in developing its wholesale stores. Walmart’s majority-owned Flipkart, however, has launched a new wholesale business Flipkart Wholesale. As part of this initiative, Flipkart acquired Walmart’s 28 Best Price Modern Wholesale units and its ecommerce business.

In China, Walmart remains strong. It is one of the last major foreign retailers trading in the country. Subscribers can follow Walmart’s story and understand key strategic priorities here.