American investment company KKR and Japan e-commerce company Rakuten will together acquire a majority stake in Japan supermarket chain Seiyu, they said Monday.

The two companies agreed with Seiyu's owner, American retailer Walmart, to acquire an 85% stake.

KKR will own 65%. Walmart will be left with 15% in Seiyu. The amount values Seiyu at around 172.5 billion yen ($1.6 billion).

The announcement confirms previous reports that the three companies were in talks.

KKR, Rakuten and Walmart collaborate to ensure Seiyu's continued business growth. The deal is expected to be completed within the first half of next year pending regulatory approval.

The three companies are confident they can tap into the growing demand for online groceries and home deliveries as the effects of the pandemic continue.

"We will focus on working closely with Seiyu's management team and associates and leveraging the expertise of Rakuten and Walmart to enhance the customer experience, meet their ever-changing needs and make shopping more accessible through digitalization," KKR Japan's chief executive officer Hiro Hirano said in a statement.

The companies are planning to leverage Rakuten's expansive e-commerce data to accelerate Seiyu's digitalization. In the process, the companies are planning to reduce Seiyu's physical stores. Seiyu currently has more than 300 stores in Japan with more than 35,000 employees.

In the late 1990s, Seiyu's business was affected by the bursting of Japan's economic bubble. In 2002, it accepted an investment deal offered by Walmart. By 2008, the Japan company became wholly owned by Walmart.

In 2018 Seiyu launched an online supermarket platform with Rakuten's help. The company established its own logistics centers to deliver goods. With the establishment of its online business Seiyu's sales grew by more than 50% the following year.