Multinational retail corporation Walmart has signed definitive agreements to divest a majority stake in Japanese supermarket group Seiyu to investment firm KKR and e-commerce retailer Rakuten.

According to the agreement, KKR will acquire a 65% stake while a recently formed subsidiary of Rakuten will purchase a 20% stake in Seiyu.

The remaining 15% stake in Seiyu will remain with Walmart.

The combined value of the deal is ¥172.5bn (approximately $1.6bn).

Walmart International president and CEO Judith McKenna said: “We have been proud investors in this business over the past 18 years and we are excited about its future under the new ownership structure.

“Today’s announcement is important because its focus is on bringing together the right partners in the right structure to build the strongest possible local business.

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“We look forward to supporting Seiyu’s growth and success, alongside KKR and Rakuten, as a minority investor.”

With the investment, Seiyu is expected to accelerate its transformation to digital. Following the transaction, Seiyu will have access to Walmart’s global retail best practices, sourcing network and scale.

A new board of directors, representing KKR, Rakuten and Walmart, will be formed for decision making and for the appointment of a new CEO.

Seiyu CEO Lionel Desclee will continue to lead through a transition period.

KKR Asia Pacific private equity co-head and Japan’s CEO said Hiro Hirano said: “We are also excited by the prospect of working with Seiyu’s associates, who have dedicated themselves to supporting the business in spite of this year’s unprecedented challenges.

“We will focus on working closely with Seiyu’s management team and associates and leveraging the expertise of Rakuten and Walmart to enhance the customer experience, meet their ever-changing needs, and make shopping more accessible through digitalisation.”

Last week, Walmart divested its Argentinian business to Latin American company Grupo de Narváez.