Wal-Mart (NYSE: WMT) will spend $878 million to buy the remaining outstanding shares it does not already own in Japanese supermarket unit Seiyu.
According to Reuters, "The world's largest retailer has invested more than $1 billion in Seiyu since 2002." The Japanese retail operation has lost money for five years. Wal-Mart will pay public shareholders a 61% premium for their shares.
Wal-Mart has exited some markets, such as Korea, because of poor results. But, Japan is one of the world's largest retail markets, and the company may feel that it cannot walk away from an opportunity there when sales at home.
And that may be the reason Wal-Mart would take the risk. A large portion of the company's growth last quarter came from outside the U.S., and the world's largest retailer has become an international company. Its strongest market is Mexico and it is also doing well in China. But there is no telling what could happen in the world's most densely populated country. The government has already put a union into the company's stores there.
Japan needs to work for Wal-Mart. There are only so many big markets left.
Douglas A. McIntyre is an editor of 247wallst.com
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Reader Comments (Page 1 of 1)
10-23-2007 @ 10:31AM
JT said...
Whoever wrote this needs to take basic writing courses again. There's at least one glaring error that I saw in the form a sentence fragment. What good is it to write most of a thought and then drop off with out actually finishing the sentence?