Wal-Mart in Pact to Enter Japan

Eager to add Japan to its global reach, retail giant Wal-Mart Stores Inc. entered an alliance with Tokyo-based retailer Seiyu with an option to buy up two-thirds of the company in five years.

“To be known as a true global retailer, we must be in Japan,” said Charles Holley, chief financial officer of Wal-Mart International. “We view this as a first step in a long-term partnership.”

Under the deal, Wal-Mart will buy 6.1% of Seiyu stock for $46 million in May. It has the option to buy up to 66.7% in three stages over five years for nearly $2 billion.

The arrival in Japan of Bentonville, Ark.-based Wal-Mart is the latest step in its worldwide expansion that includes more than 1,100 stores in countries such as Mexico, China and Germany.

Holley refused to say when Wal-Mart would open its first large-scale discount store in Japan and stressed that it was too early to make concrete predictions about Wal-Mart’s potential in Japan. But he was confident the Wal-Mart strategy would work in Japan because it has done well in other ailing economies where shoppers look for bargains.

Seiyu is one of Japan’s top retailers with group annual revenue of more than $7.8 billion. It employs about 12,500 people.

Wal-Mart rose 28 cents to $62.27 on the NYSE.