* Walmart says not in discussions with prospective buyers
* Walmart says building Japan business towards future
* Nikkei said Walmart in talks with retailers, PE funds
* Nikkei said deal would raise $2.7 bln - $4.5 bln (Adds background)
July 12 (Reuters) - U.S. retailer Walmart Inc on Thursday said it has not decided to sell its Japanese supermarket chain Seiyu and would continue to develop its business in Japan.
On Wednesday the Nikkei business daily reported Walmart would sell the supermarket chain and had approached major retailers and private equity funds, with a deal likely to raise $2.7 billion to $4.5 billion.
"Walmart has not made a decision to sell Seiyu. We are not in any discussions with prospective buyers, and we continue to build our Japan business towards the future to meet the changing needs of customers there," a spokesperson for Walmart told Reuters.
Seiyu, with more than 300 stores, would be a large asset for a Japanese retailer to absorb. Japan has become a growing focus for overseas private equity funds.
Japanese supermarkets are struggling with low profitability in the face of competition from online retailers, discount drugstores and convenience stores.
Earlier this year Walmart announced it was launching an online grocery delivery in Japan with e-commerce firm Rakuten Inc.
Reporting by Sam Nussey in Tokyo Nivedita Balu in Bengaluru; Editing by Cynthia Osterman and Diane Craft