Rakuten Announces Acquisiton Of Messaging App Viber

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Billionaire Hiroshi Mikitani’s e-commerce giant Rakuten Inc (TYO:4755) has decided to expand its reach by purchasing the messaging and calling service Viber for $900 million in a move in to social networking.

Viber shopping

With the announcement, Mikitani said that Viber will present Rakuten Inc (TYO:4755) with the opportunity to distribute its digital offerings and to create a game platform for a 300 million (and growing) user base.

Combining messaging and shopping is nothing new. Naver Corp (KRX:035420) does it with Line as does Tencent Holdings Ltd (HKG:0700) with WeChat. In Rakuten’s business model is the desire to see 70% of its business come from overseas, and Viber may be the perfect springboard.

For two consecutive years, Rakuten Inc (TYO:4755)’s properties have missed analysts’ expectations. Its book seller Kobo, however, is primed to change that.

“As smartphones become a more important communication tool than personal computers, Rakuten needs to find a way to link smartphones to its businesses,” said Naoki Fujiwara, a Tokyo-based chief fund manager at Shinkin Asset Management Co. in a recent interview with Bloomberg. “This deal is probably aimed at linking the two.”

Rakuten has ample cash

If all goes well, the acquisition is expected to be completed sometime in March through bank financing though Rakuten Inc (TYO:4755) has roughly $3.4 billion in cash and near-cash items as of last September.

“There was a sense that we can accelerate the growth of our company by tapping into Rakuten’s user base in various countries,” said Viber Chief Executive Officer Talmon Marco, a co-founder whose family owns 11.4 percent of Viber Media.

“Viber understands how people actually want to engage and have built the only service that truly delivers on all fronts,” Mikitani said in a statement. “This makes Viber the ideal total consumer engagement platform for Rakuten.”

Just ask Facebook, who was rebuffed to the tune of $3 billion by Snapchat at the end of last year.

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About the Author

Brendan Byrne
While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. To contact Brendan or give him an exclusive, please contact him at theflask@gmail.com

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