TOKYO – US investment firm KKR and Japanese e-commerce firm Raguden on Monday announced the acquisition of 85% of the Japanese supermarket chain Siu, owned by US retailer Walmart.
KKR will own 65% of Chiu’s business, while Raguden will get 20%. Walmart will catch up with the rest. The three companies agreed to the deal worth 172.5 billion yen ($ 1.6 billion).
The announcement confirms Nikkei’s previous report on the two companies’ investment in CEU. The transaction is expected to be completed in the first quarter of 2021, with regulatory approval pending. KKR, Raghuden and Walmart jointly plan to run Sioux.
As the demand for home supply expands amid COVID-19 restrictions, KKR and Raguden see the opportunity to grow Sioux’s business.
KKR will invest from its Asian private equity fund.
Hiro Hirano, Co-Chairman of Asia Pacific Private Equity and Chief Executive Officer of KKR Japan, said: “We will focus on working closely with Xiu’s management team and associates to improve the customer experience and the ever-changing expertise of Raguten and Walmart to meet their needs. Make shopping more accessible through digitization.
Companies are hoping to advance the digital transformation of Xiu’s brick and mortar stores using Ragutan’s e-commerce data.
Xiu operates more than 300 stores in Japan and employs about 35,000 people. Its finances suffered after Japan’s bubble economy exploded, and in 2002 it accepted investment from Walmart. The U.S. retailer became fully owned in 2008.
Rakuten and Walmart announced an e-commerce-related alliance in Japan in 2018.
Raghuden teamed up with Chew to start an online supermarket that year. It enables delivery from Sioux stores and logistics centers to consumer homes. Online supermarket increased its sales by 50% in October as demand from home-based shoppers increased.
The two are accelerating cooperation and plan to open a large-scale automated warehouse exclusively for online supermarkets in Yokohama next year.
Raguden, Japan’s largest e – commerce platform, has about 100 million members. It operates more than 70 businesses, including online retail and finance, and has recently become the country’s new largest mobile phone carrier.
Raguden is strong in analyzing customer data, and Siu hopes to help adjust product choices in its stores and attract more customers. The e-commerce company is investing in artificial intelligence and robotics technology.
Casunori Daketa, Executive Vice President, Raguden Group, said: “We look forward to accelerating Chew’s brick and mortar digital transformation by creating our successful partnership with Raguden Xiu Netsuper and our in-depth experience in online retail and data-based marketing. Combining better offline and online retail [online merges with offline] Customer experience. “
Walmart sought to introduce its global purchasing power through CEU in Japan, but competition with local discounts and drugstores was fierce, and it faced consumer complaints about the new food quality.
The US company has unveiled a policy of trusting Chiu in 2019. As the severity of the corona virus infection became clearer, sales of CEU increased from online shopping since March this year. But due to the increase in online shopping the stores were not able to fully utilize the high demand due to lack of stock.
“We have been proud investors in this business for the past 18 years and we are excited about its future under the new ownership framework,” said Judith McKenna, President and CEO of Walmart International. “Today’s announcement is important because its focus is on bringing the right partners together in the right framework to build strong local businesses.