Japanese e-commerce firm Rakuten Inc said on Tuesday it would buy U.S. Internet discounter Ebates Inc for $1 billion U.S., extending an acquisition spree in a deal whose logic has been questioned by analysts and investors alike.
The move underlines Rakuten's ambitions to grow overseas after recent international purchases worth over $1.2 billion U.S. But shares in Japan's biggest e-commerce firm have fallen 5.4% since it said over the weekend it was considering the deal amid doubts about how it beds in another big acquisition.
Hiroshi Mikitani, Rakuten's billionaire chief executive, said on Tuesday the purchase was an opportunity for his company to get access to Ebates' U.S. customers. The San Francisco-based firm operates websites handling rebates and coupons issued by retailers like Amazon.com Inc and Best Buy Co Inc .
The deal is in line with Mikitani's plans to reduce Rakuten's reliance on the domestic market. Japan accounts for around 90% of revenues, but growth prospects are constrained by a shrinking population and weak consumer spending.
High-profile acquisitions in recent years have included free messaging application Viber for $900 million U.S., and Canadian e-book reader Kobo for $315 million U.S. Mikitani is trying to transform Rakuten from a pure e-commerce firm into a one-stop-site for a global audience, along the lines of Amazon.
Rakuten already offers online services such as financing, travel, shopping and online video. It also recently announced it would set up a Japanese low-cost carrier with Malaysian budget carrier Air Asia.
Analysts have said Rakuten's balance sheet is sufficiently strong that the latest purchase should not be a problem for the company, which also has ready access to bank financing.
As of the end of June, Rakuten had 412.4 billion yen in cash against debts 390 billion yen. It used bank loans for the Viber purchase and cash for its $315-million U.S. purchase in 2010 of Canadian e-book reader Kobo.
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