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Wal-Mart Eyes Japan's Daiei

KOBE, Japan - The world's largest retailer is looking to expand its global presence once again, this time by considering an investment in Daiei, Japan's third-largest and financially troubled retailer.

Wal-Mart Stores, Inc. would greatly expand its presence in Japan -- the world's second-largest retail market -- if it made the move. Two years ago the company purchased part of the suffering Seiyu department store chain. It has since raised its investment in Seiyu to 38 percent and is implementing a broad restructuring plan for the chain.

Kobe-based Daiei has been compared to Wal-Mart in that it's strongest in smaller cities and suburban areas, and its product mix includes household goods, clothing, and groceries.

However, Daiei is deeply in debt after undergoing two bank-led bailout plans. It's now under pressure from its biggest creditors to come up with a new plan by the end of next month to trim its Yen 1.1 trillion, or US$10 billion, debt.

"In view of Daiei's announced plan to study a variety of restructuring alternatives, Wal-Mart plans to assess whether potential investment opportunities for our company may exist," Wal-Mart spokeswoman Amy Wyatt told the International Herald Tribune. She refused to say how big a share the company is considering taking in Daiei or to comment further on the plans.

According to the Kyodo news agency in Japan, Wal-Mart executives recently submitted a proposal for reviving Daiei to the Industrial Revitalization Corp. of Japan, a government-backed fund established to help companies burdened with high levels of debt. Although Daiei is reportedly opposed to the agency's involvement, its biggest lenders, including UFJ Holdings, have been pushing it to seek help from the group. Analysts say Wal-Mart may be hoping to take part in any agency aid to Daiei as a way of sharing the risk of taking a stake in the Japanese retailer.
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