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TOKYO – U.S. investment firm KKR and Japanese e-commerce leader Rakuten announced Monday that the two companies will buy 85% of Seiyu, the Japanese supermarket chain owned by U.S. retail giant Walmart.
KKR will own 65% of Seiyu’s business, while Rakuten will get 20%. Walmart will keep the rest. The three companies agreed to value the company at 172.5 billion yen ($ 1.6 billion) for the transaction.
This announcement confirms Nikkei’s previous report on the two companies’ investment in Seiyu. The transaction is expected to close in the first quarter of 2021, pending regulatory approval. KKR, Rakuten and Walmart plan to jointly operate Seiyu.
KKR and Rakuten see opportunity to grow Seiyu’s business as demand for door-to-door deliveries increases amid COVID-19 restrictions.
KKR will make the investment from its private equity fund in Asia.
Hiro Hirano, Co-Director of Asia-Pacific Private Equity and CEO of KKR Japan, said, “We will focus on working closely with Seiyu’s management team and associates, and leveraging the expertise of Rakuten and Walmart to improve the customer experience, meet their evolving needs and make shopping more accessible through digitalization. “
Using Rakuten’s e-commerce data, the companies hope to advance the digital transformation of Seiyu’s physical stores.
Seiyu operates more than 300 stores in Japan and employs around 35,000 people. Its finances suffered from the bursting of the Japanese economic bubble and it accepted Walmart’s investment in 2002. The American retail giant made Seiyu a wholly-owned subsidiary in 2008.
Rakuten and Walmart announced an e-commerce alliance in Japan in 2018.
Rakuten also partnered with Seiyu to launch an online supermarket that year. It helps deliver Seiyu stores and logistics centers to consumers’ homes. Overlooking demand from stay-at-home shoppers, the online supermarket saw sales increase by 50% compared to October.
The two have stepped up their cooperation, planning to open a large-scale automated warehouse exclusively for the online supermarket next year in Yokohama.
Rakuten operates the largest e-commerce platform in Japan and has around 100 million members. It operates more than 70 businesses, including retail and online finance, and recently became the country’s newest mobile operator.
Rakuten has the strength to analyze customer data and hopes to help Seiyu adjust the product selection in its stores and attract more customers. The e-commerce company has invested in artificial intelligence and robotics technology to optimize its operations.
Kazunori Takeda, Executive Vice President of Rakuten Group, said: “Building on our successful partnership on Rakuten Seiyu Netsuper, and our extensive experience in online retail and data-driven marketing, we look forward to to accelerate the digital transformation of Seiyu’s brick and mortar retail, and further merge the best of offline and online retail to provide Seiyu customers with the best OMO possible [online merges with offline] client experience. “
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