KKR and Rakuten buy 85% of Walmart’s Seiyu

TOKYO – US investment company KKR and major Japanese e-commerce company Rakuten announced Monday that the two companies will buy 85% of Seiyu, the Japanese supermarket chain owned by US retail giant Walmart.

KKR would own 65% of Seiyu’s business, while Rakuten would receive 20%. Walmart will keep the rest. The three companies agreed to value the business at 172.5 billion yen ($ 1.6 billion) for the deal.

This announcement confirms Nikkei’s previous report on the two companies’ investment in Seiyu. The transaction is expected to be completed in the first quarter of 2021, pending regulatory approval. KKR, Rakuten and Walmart plan to jointly operate on Seiyu.

KKR and Rakuten see an opportunity to grow Seiyu’s business as demand for home delivery expands amid COVID-19 restrictions.

KKR will make the investment from the Asian Private Equity Fund.

“We will focus on working closely with the Seiyu management team and its partners, leveraging the expertise of Rakuten and Walmart to enhance the customer experience, meet their needs,” said Hiroo Hirano, Co-President of Private Equity Asia Pacific and CEO of Japan’s KKR Corporation, “leveraging the expertise of Rakuten and Walmart to enhance the customer experience, meet their needs. The ever-changing needs and make shopping easier. Through digitization. “

Using Rakuten’s e-commerce data, companies hope to boost the digital transformation of their traditional Seiyu stores.

Seiyu operates more than 300 stores in Japan and employs around 35,000 employees. Its finances have struggled after Japan’s bubble economy burst, and it accepted investment from Walmart in 2002. US retail giant Seiyu made a wholly owned subsidiary in 2008.

Rakuten and Walmart announced an alliance on e-commerce in Japan in 2018.

Rakuten also collaborated with Seiyu to launch an online supermarket that year. It helps with delivery from Seiyu stores and logistics centers to consumers’ homes. Due to demand from stay-at-home shoppers, the online supermarket saw its sales grow 50% over the year in October.

The two are speeding up collaboration, planning to open a large-scale automated warehouse exclusively for an online store next year in Yokohama.

Rakuten operates the largest e-commerce platform in Japan and has around 100 million members. It operates more than 70 companies, including online retail and finance, and has recently become the nation’s newest mobile operator.

Rakuten is strong in analyzing customer data and hopes to help Seiyu adjust product selections in its stores and attract more customers. The e-commerce company is investing in artificial intelligence and robotics technology to improve operations.

Kazunori Takeda, Executive Vice President of Rakuten Group, said: “By building on our successful partnership at Rakuten Seiyu Netsuper, and our in-depth expertise in online retailing and data-based marketing, we look to accelerate Seiyu’s digital transformation of brick and mortar retail, and more. Combining the best of online and online retailing to provide Seiyu customers with the best possible OMO products [online merges with offline] Customer experience. “