US-based retail giant Walmart has emerged as a front-runner to become a partner to Matahari Putra Prima, after South Korea’s Lotte pulled out of negotiations to invest in the Indonesian hypermarket operator.

According to a report from Reuters, Lippo group, which controls Matahari through PT Multipolar, is now seeking a global partner, after plans to sell its hypermarket chain failed to generate an acceptable price.

'Lotte is out due to disagreement over pricing and branding,' a source with direct knowledge of the deal told the news agency.

'However, Walmart is still in talks with the group on the possible partner deal,' the source added.

Walmart and Lotte had both expressed interest in buying Matahari’s Hypermarket assets, along with French retailer Casino and private equity group Carlyle Group.

With 52 outlets, Hypermart is Indonesia's second-largest hypermarket chain after PT Carrefour Indonesia.

The chain generates annual revenue of US$1bn, reported Reuters.