Japan's Rakuten to Buy US Shopping Firm Ebates for $1 Billion

Share on Facebook Tweet Snapchat Share Reddit Comment
Japan's Rakuten to Buy US Shopping Firm Ebates for $1 Billion
Japanese e-commerce giant Rakuten said Tuesday it would buy US online shopping operator Ebates for about $1.0 billion as it taps overseas markets to counter a limited home market.

Rakuten said the all-cash deal would give it access to 2.5 million new customers in the United States, Canada, South Korea and China.

"The company will acquire Ebates for a total consideration of $1 billion in cash, and will hold 100 percent of Ebates outstanding voting stock," Rakuten said in a statement.

"The combination of the two companies will give birth to an attractive and innovative membership-based marketplace for consumers featuring a points programme at the core."

Rakuten's billionaire chief executive Hiroshi Mikitani said it was a "strategically important" move that would give his company a foothold in the enormous US market.

The deal could help Rakuten compete abroad with industry giants Amazon and China's Alibaba, which is preparing an initial public offering that could raise as much as $24.3 billion in what be the biggest share sale in history.

San Francisco-based Ebates runs websites that offer rebates and coupons for shopping from 1,700-plus partner retailers, including Amazon and eBay.

It hosted about $2.2 billion in transactions in its 2013 fiscal year.

Rakuten has a credit-card-linked reward points system in Japan to help retain its customer base.

Lacking a similar setup in the United States, the Ebates acquisition is seen as a way to lure shoppers looking for cash-back deals to Rakuten's virtual shopping mall.

Since launching its business in Taiwan in 2008, Rakuten has expanded to more than 10 foreign markets.

But its foreign e-commerce transactions are a small share of its overall business, which is focused on a domestic market that is unlikely to offer much more room for growth.

Last year, Rakuten bought US video-streaming provider Viki for about $200 million while in February it picked up messaging app provider Viber for around $900 million.

It has also scooped up Canadian e-reader firm Kobo.

Rakuten's Tokyo-listed shares ended down 1.25 percent at 1,254.0 yen ($12) before the deal was confirmed.

However, the stock has been under pressure as investors questioned the size and merits of the reported deal, said Monex Group market analyst Toshiyuki Kanayama.

"It's not totally clear that it will add significantly to Rakuten's business," he told Dow Jones Newswires.

"Additonally, it also leaves room for speculation that Rakuten may turn to a potentially dilutive share offer in order to raise funds for the purchase."

Comments

For the latest tech news and reviews, follow Gadgets 360 on Twitter, Facebook, and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel.

Further reading: Internet, Rakuten
Xiaomi Says 40,000 Redmi 1S Phones Go Out of Stock in 4.5 Seconds
Nvidia Battlebox Titan Sr Review: Phenomenal Power at a Reasonable Price

Related Stories

 
 

Advertisement

Advertisement

© Copyright Red Pixels Ventures Limited 2021. All rights reserved.
Listen to the latest songs, only on JioSaavn.com