Wal-Mart Pays Yen 52 Billion For Controlling, 37.8% Stake in Seiyu Supermarkets
Wal-Mart paid Yen 52.05 billion ($435 million) to raise its stake in ailing Japanese supermarket operator Seiyu from 6.1% to a controlling 37.8% in a transaction executed 12/27, reports said. The purchase makes Wal-Mart the largest shareholder in Seiyu, replacing the Sumitomo trading house and gives it a legal boardroom veto that is regarded in Japan as the effective equivalent of a controlling interest.
The purchase came a little sooner and was a little bigger than had been expected. When Wal-Mart bought its original 6.1% interest in Seiyu last spring (Digest, 5/24/02), it took an option to buy 66.7% by the end of 2007. Nihon Keizai said last Fall that Wal-Mart might raise its interest to 33.4% by late last year. The companies have begun opening joint stores, however, and Wal-Mart now plans to move some managers into Seiyu, and license the Japanese company rights to the Wal-Mart trade name.
In the face of steeply declining foreign direct investment in Japan, I’m happy to see Wal-Mart moving in to Japan because I think the new competition will be healthy for the Japanese supermarket market. It’s not clear that the traditional Wal-Mart model will work in Japan without some significant customization, but it’s nonetheless a good sign.
via Japan Digest (no web site!)