Mar 15, 2021
Rakuten shares jump 24% on Japan Post stake sale
Mar 15, 2021
Rakuten Inc’s shares jumped as much as 24% on Monday after the Japanese e-commerce firm said it would raise $2.2 billion through a stake sale to companies including Japan Post and Tencent as it takes on Amazon.
Rakuten shares were trading up 18% at 1,471 yen at 02:28 GMT - the biggest rise in 17 years - after earlier hitting a daily limit high of 1,545 yen. That brings Rakuten’s share gain from Friday to almost 30% and lifts its market cap to 2.1 trillion yen ($19.4 billion).
The deal is a funding injection for Rakuten’s investments in logistics, where it is competing with Amazon and SoftBank’s newly bulked-up internet business, and in mobile, where it is taking on the three incumbent carriers.
“Rakuten could receive significant help from the expert in logistics services,” Jefferies analyst Hiroko Sato wrote in a note, referring to Japan Post, which operates 24,000 post offices nationwide.
The mobile business “has been a huge drag on its valuations and earnings for a while now but one which will see costs peak this term,” wrote Asymmetric Advisors analyst Amir Anvarzadeh in a note.
Investors also warmed to potential partnerships with backers Tencent, the world’s largest gaming company, and Walmart, the world’s largest retailer, which is also a buyer in Rakuten’s share sale and is leading a digital fightback against Amazon in the United States.
A battle with Amazon
Rakuten, which plunged to an operating loss in 2020, is under pressure on multiple fronts as it battles Amazon in e-commerce and takes on Japan’s cash-rich telcos with its own mobile network.
“Rakuten is the best partner for us, as it has advanced digital technology,” Japan Post Holdings Chief Executive Hiroya Masuda told a news conference last week.
The deal makes Japan Post Holdings the biggest shareholder in Rakuten outside the founding Mikitani family, and is part of a 242-billion-yen ($2.2-billion) share sale to companies including Tencent and Walmart.
A former state-owned utility that was later privatised, Japan Post Holdings has a presence on almost all Japanese high streets, with its postal unit having around 24,000 post offices nationwide.
“As tech giants grow in power we’re combining our strength,” said Rakuten’s chief executive, Hiroshi Mikitani.
This month, chat app operator Line merged with SoftBank’s internet business Yahoo Japan in a deal first announced in 2019.
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