Fortress closes in on Japan's Sogo & Seibu

Fortress Investment Group is close to a deal to acquire Japanese department store chain Sogo & Seibu for more than 200 billion yen from Seven & i Holdings, Bloomberg reports.

Why it matters: 2022 has not been kind to the traditional retail LBO in the U.S., but there may be assets overseas that better fit this model going forward, and the strengthening U.S. dollar could also encourage cross-border transactions.

Details: The discussions are in their final stage and a deal could be announced as soon as Thursday, the article said, citing sources familiar with the matter.

• Fortress will partner with Japanese electronics and appliance retailer Yodobashi Holdings, which could become a tenant of some Sogo & Seibu department store locations.
• The Seven & i board is expected to meet Thursday.

Between the lines: Although talks are advanced, the deal could still fall apart, the article cautioned.

• The sale of Sogo & Seibu is tied to a strategic review of that business by Seven & i. It had been looking to sell it to focus on its convenience and supermarket businesses.

By the numbers: The department store unit recently generated operating income of 465 million yen on a quarterly basis compared with a loss in the same period a year ago, according to the article.

Of note: In September, Fortress' owner Softbank was reportedly nearing a deal to sell the New York-based PE firm to Mubadala Investment Co. for more than $2 billion, per Bloomberg.

Fortress did not immediately respond to a request for comment.