Private equity giant KKR & Co (KKR) and U.S.retailer Walmart(WMT) are selling their ownership of the Japanese supermarket chain Seiyu for $2.5 billion.
KKR Has Bolstered Seiyu Growth
KKR said it was selling its 85% stake in the 240-store strong Japanese group, with U.S. retail giant Walmart offloading its remaining 15% share to Japanese “everyday essentials” retailer Trail Holdings. Both KKR and WMT stock were up slightly in pre-market trading.
KKR stressed that it and Walmart had worked closely to support Seiyu’s growth over the last few years by improving both the quality and selection of products it sells and its use of technology such as self-checkout systems to boost its operations.
KKR’s interest in Seiyu began in 2021 when it bought a 65% majority stake from Walmart. This was followed by an additional purchase of 20% from Rakuten in 2023. The acquisition by Trail is expected to close in the second quarter this year, pending regulatory approvals.
Trail On Expansion Path
Trail Holdings, which is known for selling discount goods, aims to use the deal to expand its footprint in Japan, creating a retail group with sales of over $6 billion. It is understood that it beat out competition from other major retailers such as Aeon and Don Quijote-owner Pan Pacific International Holdings.
KKR did not explain why it had decided to sell its stake now, but the Japanese supermarket sector has traditionally been a tricky environment for foreign retailers, with UK supermarket Tesco and French retailer Carrefour exiting the market in recent years. Walmart is understood to be focusing on other international markets such as China and India as well as at home in the U.S.
Is KKR a Good Stock to Buy Now?
On TipRanks, KKR has a Strong Buy consensus based on 11 Buy and 3 Hold ratings. Its highest price target is $214. KKR stock’s consensus price target is $174.23 implying an 44.25% upside.
