Rakuten Climbs Most in Five Months After Deal to Acquire Ebates
This article by Yuki Yamaguchi for Bloomberg may be of interest to subscribers. Here is a section:
Rakuten Inc. rose the most in five months after it agreed to buy U.S. rebates website Ebates Inc. in Japan’s largest e-commerce deal, a move that will more than double the e-retailer’s transactions from overseas.
?Rakuten will pay $1 billion in cash for all of Ebates, it said yesterday. San Francisco-based Ebates offers cash rebates to customers who buy products ranging from laptops to lipsticks from the website’s retail partners.
Rakuten’s billionaire Chairman Hiroshi Mikitani is betting the purchase will help the Tokyo-based company push its global e-commerce strategy. Rakuten has also been investing in technologies such as mobile applications and online video as it seeks to add to its online marketplace business.
“This deal doesn’t just mean we’ve started a cash-back website in the U.S., I think we can operate this model all over the world,” Mikitani told reporters at a briefing in Tokyo yesterday. The purchase will lift the proportion of Rakuten’s e- commerce transactions from outside Japan to 16 percent from about 6 percent now, he said.
Rakuten, which operates Japan’s biggest online mall, aims to raise the proportion to 50 percent around 2020, said Mikitani, Japan’s fourth-richest man with a net worth of about $6.9 billion according to the Bloomberg Billionaires Index.
Facebook’s $19 billion purchase of WhatsApp in January garnered a great deal of media attention not least because of the price tag. When Rakuten bought Viber, a very similar service, a week earlier for $900 million it passed off without much comment. It seemed to me at the time that the VIber purchase was the better buy if one looks beyond the short term hype.
This week’s purchase of Ebates has been more favourably received and further stresses Rakuten’s intent to compete globally on the online marketplace. The share found at least short-term support today above the May low and a sustained move below ¥1200 would be required to question medium-term scope for continued upside.
More broadly, Japan’s Topix Index erased its decline for the year to hit a new closing high. Some additional upside follow through would represent a breakout from what has been an 18-month range.
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