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Wal-Mart Takes Stake in Japanese Supermarket Retailer

TOKYO - Wal-Mart Stores Inc. has agreed to purchase a strategic stake in The Seiyu Ltd. (Seiyu), a leading $8 billion Japanese retail chain that focuses primarily on supermarkets and general merchandising stores. As part of the agreement, Sumitomo Corporation K.K. (Sumitomo Corp.), Seiyu's largest shareholder, will increase its holding in Seiyu.

Wal-Mart would pay approximately 6 billion yen ($46 million) for 6.1 percent of Seiyu's stock, and Sumitomo Corp. would pay approximately 5 billion yen ($38 million), for 5.1 percent of Seiyu's stock. This represents a total purchase of approximately 42.5 million shares at 259 yen per share. Sumitomo Corp.'s aggregate ownership would be approximately 15.6 percent. Under the agreement Wal-Mart would have the ability to inject up to 260 billion yen ($2 billion) of new equity into Seiyu, raising its stake up to 66.7 percent over time. This transaction is subject to approval from Seiyu's shareholders and other approvals.

Wal-Mart, Seiyu and Sumitomo Corp. say they view this agreement as the first step in a long-term partnership. The three companies plan to study and develop retail business opportunities in Japan.

The partnership would give Wal-Mart a solid platform in the Japanese retail market, allowing it to leverage Seiyu's strong market position.

"We are excited about the long term potential of the Japanese market," said John Menzer, president and CEO of Wal-Mart International. "We are attracted to Seiyu by its management strength and experience. Seiyu and Wal-Mart share a strong commitment to providing value and satisfaction to our customers. We are also delighted to be able to benefit from the breadth of Sumitomo Corp.'s expertise, its solid business base and in particular its focus on the retail sector."

Charles Holley, senior vice president and chief financial officer, Wal-Mart International added, "This transaction is designed to give us the opportunity to work closely with Seiyu and its management team, and to study the business opportunities in Japan more thoroughly. We are delighted to have the support of Seiyu's largest shareholder, Sumitomo Corp., in this partnership."

"With this agreement, we have the opportunity to develop our partnership with Wal-Mart, the world's most successful retailer," said Masao Kiuchi, president of Seiyu. "Together we plan to study the opportunities offered by the Japanese market, and assess how we might add value for our customers through this new partnership."

Internationally, Wal-Mart operates more than 1,170 units in Argentina, Brazil, Canada, China, Germany, South Korea, Mexico, Puerto Rico and the United Kingdom. Currently the Seiyu Group operates over 400 stores located throughout Japan.
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