Seven & I Holdings said Friday it plans to sell its struggling department store unit Sogo & Seibu to U.S.-based investment fund Fortress Investment Group for around ¥250 billion ($1.73 billion).

Fortress said it will revamp the operator of Sogo and Seibu department stores by teaming up with electrical appliances retailer Yodobashi Camera. A plan is under consideration to make Yodobashi a major tenant for the department stores, according to sources familiar with the matter.

Sogo & Seibu, which runs a total of 10 stores in the Tokyo metropolitan area and a few other regions, has been struggling with red ink for the past three fiscal years as the rise of online shopping and the coronavirus pandemic battered its business.

Seven & I made the decision after coming under pressure from ValueAct Capital, a U.S. investment company with a stake in the Japanese retailing group, to sell the department store unit and focus resources on its Seven-Eleven convenience store business.

In response, Seven & I began a study of the sale, which led to the first round of bidding in February. After the second round in May, Fortress was given preferred bidder status.

In January, Fortress, which is under SoftBank Group Corp. and has a wealth of knowledge and experience in the real estate space, acquired Accordia Golf Group, the biggest golf course operator in Japan.

It has also invested in Leopalace21, an operator of rental apartments.