Rakuten CEO Hiroshi Mikitani (left) and Ebates CEO Kevin Johnson at a press conference to announce the deal in Tokyo.  Rakuten CEO said the  all-cash deal would give it access to 2.5mn new customers in the US, Canada, South Korea and China.

AFP

Tokyo

Japanese e-commerce giant Rakuten said yesterday it would buy US online shopping operator Ebates for about $1.0bn as it taps overseas markets to counter a limited home market.

Rakuten said the all-cash deal would give it access to 2.5mn new customers in the US, Canada, South Korea and China.

“The company will acquire Ebates for a total consideration of $1bn in cash, and will hold 100% of Ebates outstanding voting stock,” Rakuten said in a statement.

“The combination of the two companies will give birth to an attractive and innovative membership-based marketplace for consumers featuring a points programme at the core.”

Rakuten’sbnaire chief executive Hiroshi Mikitani said it was a “strategically important” move that would give his company a foothold in the enormous US market.

The deal could help Rakuten compete abroad with industry giants Amazon and China’s Alibaba, which is preparing an initial public offering that could raise as much as $24.3bn in what be the biggest share sale in history.

San Francisco-based Ebates runs websites that offer rebates and coupons for shopping from 1,700-plus partner retailers, including Amazon and eBay. It hosted about $2.2bn in transactions in its 2013 fiscal year.

Rakuten has a credit-card-linked reward points system in Japan to help retain its customer base.

Lacking a similar setup in the US, the Ebates acquisition is seen as a way to lure shoppers looking for cash-back deals to Rakuten’s virtual shopping mall.

Since launching its business in Taiwan in 2008, Rakuten has expanded to more than 10 foreign markets. But its foreign e-commerce transactions are a small share of its overall business, which is focused on a domestic market that is unlikely to offer much more room for growth.

Last year, Rakuten bought US video-streaming provider Viki for about $200mn while in February it picked up messaging app provider Viber for around $900mn.

It has also scooped up Canadian e-reader firm Kobo.

Rakuten’s Tokyo-listed shares ended down 1.25% at ¥1,254.0 ($12) before the deal was confirmed.

However, the stock has been under pressure as investors questioned the size and merits of the reported deal, said Monex Group market analyst Toshiyuki Kanayama.