Japanese e-commerce giant Rakuten Inc has announced its acquisition of call and messaging app provider Viber Media Inc for $900 million, as part of its expansion by acquisition strategy. The all cash deal was announced after reports surfaced of an 80 per cent jump in Rakuten's 2014 operating profits.
Controlled by billionaire Hiroshi Mikitani, Rakuten currently offers services from shopping to financing on its e-commerce platform - which is said to be the largest in Japan. The firm also controls the Play.com online store in the UK, owns the Canadian e-reader Kobo and holds a big stake in the Pinterest social network - all acquired in efforts to compete with Amazon.com.
With evidence of a shrinking population and decrease in consumer spending at home, Mikitani has ambitious plans to try to re-invent Rakuten as a one-stop-site for a worldwide audience. The business hopes to have 70 per cent of its sales transactions come from overseas from as early as 2020, according to Bloomberg.
Whist looking for an app to provide a distribution channel for its digital products, expanding into emerging markets, the firm also plans to create a game platform on Viber, very much similar to ones we've seen on Naver Corp's Line.
Viber, based in Cyprus and run by Israeli entrepreneur Talmon Marco, currently has around 300 million IM and free internet phone services users worldwide. Rakuten hopes to add these users to more than double the number of regular users of its digital empire. Mijitani told reporters in Tokyo that "This acquisition is a totally new strategy that will take Rakuten to a different level."
"Viber understands how people actually want to engage and have built the only service that truly delivers on all fronts," explained Mikitani in a statement. "This makes Viber the ideal total consumer engagement platform for Rakuten as we seek to bring our deep understanding of the consumer to vast new audiences."
Viber's Marco also commented upon the deal, "This combination presents an amazing opportunity for Viber to enhance our rapid user growth in both existing and new markets." Ambitiously he added "Sharing similar aspirations with Rakuten, our vision is to be the world's number one communications platform. And our combination with Rakuten is an important step in that direction."
Current competitors to Viber include messaging services such as Line, WhatsApp, Skype, QQ and WeChat globally, with Line being the biggest competitor on Rakuten's home turf of Japan. The intention is to get Viber users up to a target of around 500 million users by the end of this year.
This is also not the first deal we have seen Rakuten making in the recent years, as the company purchased Europe-based video-on-demand company Wuaki.tv in 2012 and went on to buy online TV firm Viki last year. The firm was last recorded to control 27.7 per cent of Japan's Internet retail market, according to data from researcher Euromonitor International.
