The Arkansas-based company said it will sell 65 percent of its Seiyu grocery chain to American investment firm KKR while Japanese e-commerce giant Rakuten will acquire a 20 percent stake.

Walmart will hold onto 15 percent of Seiyu under the deal valuing the grocery business at 172.5 billion yen, or about $1.6 billion — well below the 300 to 500 billion yen that Walmart reportedly sought in recent years.

“Today’s announcement is important because its focus is on bringing together the right partners in the right structure to build the strongest possible local business,” Judith McKenna, president and CEO of Walmart International, said in a statement.

Walmart snapped up a 6 percent stake in Seiyu in 2002 in its first foray into Japan and gradually bought more of the 57-year-old chain until it assumed full ownership in 2008.

The move to largely exit Japan follows Walmart’s similar withdrawals in recent months from other foreign countries such as Argentina and the UK, where it reached a deal last month to sell a majority stake in the Asda supermarket chain.

The Japanese deal aims to build on Seiyu’s existing partnership with Rakuten — which includes an online grocery delivery service — to build up the chain’s digital business while maintaining its access to Walmart’s sourcing network and best practices.

Seiyu CEO Lionel Desclee will stay at the helm until a new board comprising representatives from KKR, Rakuten and Walmart appoints a new chief executive after the deal closes, which is expected to happen in the first quarter of next year, according to a news release

Walmart shares were up about 1.8 percent Monday at $153.22 as of 2:25 p.m.

With Post wires