Expansion is pricey for Rakuten

Expansion is pricey for Rakuten

As it plans to expand internationally, Rakuten needs money

The week started with a deal in the tech sector. The Japanese giant Rakuten announced that it would sell part of its business to raise $2.2 billion to compete with its US rivals.

Japan Post, which will be the biggest shareholder outside the founding Mikitani family, will buy 8.3%, while Chinese Tencent will acquire a 3.6% stake, and Walmart will purchase a 0.9% stake in Rakuten.

Operating in various sectors from e-commerce to mobile network and financial technology, Rakuten has a market capitalization of around $16.4 billion. As the company grows and expands, it needs capital to continue to do so. According to Hiroshi Mikitani, Rakuten’s founder, chairman and CEO,” the company is growing very fast — even at this size — and we need more capital for the growth.”

Tencent appears to be Rakuten’s ticket to the Chinese market after failing to reach a partnership with the Chinese internet giant, Baidu. “Now, with a partnership with Tencent, we have a channel to export Japanese products to the Chinese market, as well as export Japanese content ... to the Chinese market as well,” stated Mikitani.

The market reacted in a mixed manner to the news, with Walmart stock price trading 0.22% higher, and Tencent closing 7.52% lower. Rakuten added more than 8%.

Sources: finance.yahoo.com, cnbc.com

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