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Rakuten falls most in four months on talks to acquire Ebates

Bloomberg

Rakuten share prices fell further Monday than they had in four months after the owner of Japan’s largest online mall said it is in talks to buy U.S. website operator Ebates Shopping.com Inc.

Rakuten, controlled by billionaire Hiroshi Mikitani, is negotiating the acquisition, according to a company statement released Saturday.

Tokyo-based Rakuten may pay about ¥100 billion ($950 million) for Ebates and is nearing a final agreement in a deal that is expected to be announced as early as this week, a source familiar with the matter said, asking not to be named as details of the talks are private.

Rakuten shares declined as much as 4.7 percent to ¥1,263, the biggest intraday loss since May 9, and were at ¥1,270 at the close of trading Monday in Tokyo.

The deal follows Rakuten’s $900 million acquisition of Internet messaging and calling service Viber in March as Mikitani looks outside Japan for growth. It would give Rakuten access to Ebates services, including a cash-back program for customers who shop at the U.S. company’s partner websites, the source familiar with the negotiations said.

“It’s so hard to see the cost-effectiveness” of the deal as the company has provided little details and it’s unclear what synergies the transaction could provide, which is driving the shares down, said Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. “It’s hard to judge at this point if it’s a reasonable deal.”

Ebates, based in San Francisco, didn’t immediately respond to an inquiry after regular business hours.

Rakuten said in June it is open to more large-scale acquisitions after strengthening the company’s financing by issuing its first public bonds, selling ¥30 billion of three-year notes.

The company is accelerating deals inside and outside Japan and said in July it agreed to acquire an 18 percent stake in a Japanese low-cost airline venture with AirAsia Bhd. It also bought Canadian e-book company Kobo Inc. in 2012 and paid $250 million for U.S. shopping website Buy.com in 2010.

Ebates was founded in 1998. The company offers discounts and rebates for more than 1,700 online stores, including Amazon.com Inc., Macy’s Inc. and Home Depot Inc. Members get paid back a percentage of every purchase they make each quarter.

Rakuten currently has a loyalty program that lets customers earn points when they shop and use them as discounts for future purchases.