Rakuten buys beyond Asia

Contact: Jarrett Streebin

Japanese companies have never been known as serial acquirers, but Rakuten is certainly doing its best to stay busy. In each of the past two months, the Japanese conglomerate, which has a significant online retail operation, has spent a quarter-billion dollars in an effort to build up its Web retailing business. The deals represent significant bets by Rakuten to expand into new markets around the globe.

In its most recent acquisition, Rakuten said it will pay $245m for French e-tailerPriceMinister. According to one report, the purchase valued the 10-year-old target at 4 times trailing revenue and 24x trailing cash flow. The transaction comes one month after Rakuten said it will pay $250m in cash for Buy.com.

The deals make sense from a strategic view: Both Buy.com and PriceMinister are similar to Rakuten in that they act as aggregators for online shopping, connecting thousands of merchants to consumers. But these are Rakuten’s first significant steps toward expanding its online retail business outside of Asia. (It did make a sizable purchase of a New York City-based company, LinkShare, in September 2005, but that was primarily for sales and marketing analytics, rather than a consolidation move.) In the past, Rakuten has used joint ventures and acquisitions to expand its online retail capabilities in China, Indonesia, Taiwan and Thailand. And, we would add, the company still has the equivalent of hundreds of millions of dollars for shopping in other markets.