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Wal-Mart set to boost Japan presence
TOKYO, Japan (CNN) -- Wal-Mart looks set to boost its stake in Japanese supermarket chain Seiyu Co. after it completed the sale of a subsidiary. Seiyu stock jumped 3.28 percent to 378 yen on Thursday with the deal looking increasingly likely. The shares have risen 26 percent since Monday. That's when Seiyu completed the sale of its Tokyo City Finance Co. subsidiary to the U.S. investment fund Lone Star Group, which is also taking on claims of around 33 billion yen ($270 million). Wal-Mart has until December 27 to exercise an option to boost its stake in Seiyu to 33.4 percent, from 6.1 percent now. By 2007, it can boost that to 66.7 percent of the company, with another two options for more shares. The first option gives it a 30 percent discount on the current price of the stock, with the retailer able to buy them at 270 yen a share, for a total investment of some 52 billion yen ($425 million). Biggest shareholderThat would make it the supermarket's biggest shareholder, passing trading house Sumitomo Corp. Some observers had questioned Wal-Mart's choice of Seiyu because of its heavy debt load. But the sale of its subsidiary helps Seiyu cut that burden by around 150 billion yen, to around 460 billion yen ($3.8 billion). Shedding the finance arm is also likely to please Wal-Mart by keeping the company focused on retailing. Officially, Wal-Mart, Seiyu and Sumitomo are still conducting a feasibility study. But comments from Seiyu President Masao Kiuchi in local media suggest the Wal-Mart investment will go ahead. Seiyu predicts it faces a net loss of 21 billion yen ($172 million) for the business year through to next March.
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