Rakuten and KKR to Purchase 85% of Walmart Stake in Seiyu

Walmart Inc. (NYSE: WMT) has offered its 85% shares in Seiyu GK to the Japanese e-commerce giant, Rakuten Inc (TYO: 4755) and KKR & Co Inc (NYSE: KKR). The deal means Walmart is nearly exiting the Japanese market after facing stiff competition and recording low margins in the last few years. Seiyu GK has been a wholly-owned subsidiary of Walmart since 2008, and in 2019, they attempted to delist it.

Interestingly, Walmart has over the years sought to pave the way for the right parties to come on board to meet the ever-changing needs of consumers by building a strong local business. 

The definitive agreement will ensure that KKR & Co purchases the majority of the stakes by owning 65% of Walmart’s ownership in Seiyu GK with Rakuten purchasing 20% of the stake. Walmart will as well retain 15% of its shares in Seiyu GK. The deal yet to be finalized will be worth around $1.6 billion. Rakuten has earlier formed an alliance with Walmart in a decision to launch an online grocery delivery service in the country. This makes them a highly fit candidate as they already know the business terrain of Seiyu GK. The partnership with KKR & Co and Rakuten will ensure that the shopping industry in the country is made accessible to a wider consumer base through effective digitization. 

Rakuten will ensure that the brick and mortar retail of Seiyu GK is widely extended through its subsidiary called Rakuten DX solution. This will ensure that Seiyu GK takes charge of the growing internet shopping that has hit a promising form after the COVID-19 pandemic. 

The new deal will have several benefits for consumers including the introduction of diverse payment methods as well as low-priced products that will help consumers make rational shopping decisions. Also, both online and offline channels will have improved services. Payment, delivery services and shopping based on the App will be enhanced. 

According to the report, Walmart, Rakuten and KKR & Co will have representatives in the newly formed Board of Directors to appoint a Chief Executive Officer to run an affair after the deal has been finalized. Currently, Lionel Desclee, the CEO of Seiyu GK will still be in charge of leading the business in the transition. After this, he will assume a new role in Walmart as claimed by reports. Rakuten will take advantage of the functions of the Rakuten DX Solution to accelerate the digital transformation of the company. 

Seiyu GK has over the years attained a high feat of customer satisfaction, market shares, financial performance and association agreement with the collaboration of the three companies complementing it by adding value and digital customer convenience to the already well-performing key areas. 

The president and CEO of Walmart International, Judith McKenna, the CEO of KKR & Co in Japan, Hiro Hirano, and the President of Rakuten, Kazunori Takeda have all expressed their excitement to work together to build Seiyu GK to stand tall among the others in the country. 

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