Wal-Mart 'targets Japan retailer'

Wal-Mart's retail formula has proved successful elsewhere

US retail giant Wal-Mart is thinking of investing in Japanese supermarket chain Daiei, according to reports.

Shares in the heavily indebted Japanese retailer jumped on the news and were up 27% at 235 yen by close of trading.

Wal-Mart already owns a 37.8% stake in Japan's fourth-biggest supermarket chain Seiyu, but is thought to want a bigger share of the Japanese market.

Daiei's larger outlets may be more suited to Wal-Mart's sales style, the Nihon Keizai Shimbun report said.

Lifeline for Daiei

Wal-Mart has hired Dresdner Kleinwort Wasserstein and Goldman Sachs as advisers to review investment possibilities in Daiei, a Reuters report said.

It is currently unclear what form a Wal-Mart investment might take.

Daiei's main lender, UFJ Holdings, wants to speed up the restructuring of the supermarket group ahead of UFJ's planned merger with Mitsubishi Tokyo Financial Group.

Any Wal-Mart plan is likely to allow Daiei to maintain its retail operations and would involve a less drastic restructuring than that currently favoured by banks.

Daiei has already been bailed out twice, but with serious reform now on the cards the company is starting to attract more interest.

Other potential investors include American turnaround fund Ripplewood and trading group Marubeni, already a Daiei shareholder.