BackRakuten to acquire Ebates in Japan’s biggest e-commerce deal
The firm will pay $1 billion in cash for all of Ebates, a San Francisco-based rebates website
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Tokyo: Rakuten Inc. agreed to buy US rebates website Ebates Inc. in Japan’s largest e-commerce deal as the operator of the country’s biggest online mall seeks overseas growth through acquisitions.
Rakuten, controlled by billionaire Hiroshi Mikitani, will pay $1 billion in cash for all of Ebates, it said in a filing to the Tokyo Stock Exchange on Tuesday. San Francisco-based Ebates offers cash rebates to customers who buy products ranging from laptops to lipsticks from the website’s retail partners.
The deal comes after Rakuten announced 18 acquisitions since the start of last year, and the cybermall operator said in June it’s open to more large-scale buys following its bond debut. Tokyo-based Rakuten bought messaging service Viber Media Inc. for $905 million in March, Japan’s biggest e-commerce deal at the time according to data compiled by Bloomberg.
“With participation of Ebates, Rakuten Group aims to create the world’s largest product line-up ranging from niche to luxury products," Rakuten said in the statement. “The combination of the two companies will give birth to an attractive and innovative membership-based marketplace for consumers featuring a point program at the core."
2.5 million members
Rakuten fell 1.3% to 1,254 yen at the close of trading in Tokyo, the lowest level since 23 May. The stock has lost 20% this year, compared with the 0.2% decline in the benchmark Topix. The shares dropped the most in three months on 8 September on concerns about the deal’s cost effectiveness, after Rakuten confirmed it was in negotiations.
Ebates, which has 2.5 million active members and more than 2,600 retailers in its network, posted an operating income of $13.7 million on net revenue of $167.4 million in fiscal 2013, according to Rakuten’s statement.
Ebates generated $2.2 billion of gross merchandise value, Rakuten said, adding that the potential impact on its earnings from the acquisition is “difficult to estimate" at present.
Mikitani, Japan’s fourth-richest man with a net worth of about $7 billion according to the Bloomberg Billionaires Index, has been plowing cash into technologies such as mobile applications and online video as he seeks to add to Rakuten’s core online marketplace business.
The company, which Mikitani founded in 1997, was an acquirer in three of the top ten e-commerce deals in Japan before the Ebates purchase was announced, according to data compiled by Bloomberg. As of 30 June, Rakuten had about 1.7 trillion yen ($16 billion) in cash and short-term investments, according to data compiled by Bloomberg. Bloomberg
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