Yahoo Japan Corp. has agreed to turn big online fashion retailer Zozo Inc. into a subsidiary for as much as ¥400 billion, which is expected to help it compete more effectively with larger rivals, such as Amazon Inc. and Rakuten Inc.

The deal is also likely to bolster the e-commerce prospects of Yahoo Japan, whose biggest shareholder is SoftBank Corp., the domestic telecom business of Masayoshi Son’s SoftBank Group Corp. empire.

The company offered ¥2,620 per share, a 21 percent premium on Zozo’s closing price, sending its shares soaring Thursday.

Charismatic founder Yusaku Maezawa, who agreed to the tender offer, stepped down Thursday as chief executive officer, handing the baton to Zozo director Kotaro Sawada.

The fate of Zozo, which operates the online shopping mall Zozotown, will rest on whether it can retain its brand image under its new parent, analysts suggest.

Zozo has concluded that it is important to partner with Yahoo “for stable business growth,” Sawada said during a joint news conference later that day in Tokyo.

The company’s business has recently been plagued by a series of failed initiatives, including a custom clothing project that used body-measuring Zozosuits, polka-dot spandex suits the company shipped with help of smartphones. It sold 3 million of them.

Maezawa is known for his flamboyant ambitions, including the $110 million purchase of a Jean-Michel Basquiat painting and signing up to be the first private passenger to the moon on Elon Musk’s SpaceX ship.

The deal could help steer Yahoo Japan customers, many of whom are middle-aged or older, to Zozotown, which has a large younger following, and vice versa.

Other benefits for Zozo would include presence in an online shopping mall named PayPay Mall that Yahoo Japan is set to launch this fall, and the introduction of the PayPay mobile payment service at Zozotown.

“It’s a plus for Yahoo Japan and would help expand their e-commerce operations,” said Mitsushige Akino, an executive officer with Ichiyoshi Asset Management Co. in Tokyo. “Zozo gets the financial back up it needs for its new venture and overseas expansion.”

Another analyst, who declined to be identified, said it is difficult to assess the prospects of the two companies, but that the key is whether Zozo is able to continue offering its unique services under Yahoo’s framework.

“There are concerns that by going under the Yahoo’s umbrella, the brand value of Zozo may be ‘Yahoo-ized,'” he said.

Adding to uncertainty is the resignation of Maezawa, who has been viewed as a maverick business leader. Chances are high that Maezawa’s involvement in the company will be significantly diminished, one of the analysts added.

At the news conference on Thursday, Sawada described himself as being realistic, neutral and stable, a characterization he said is “the polar opposite” from out-of-the-box Maezawa.

But thanks to Maezawa’s charismatic management, Sawada added, the company’s business has grown, and so has its impact on industry and society. At the same time, “stability” has become important for the company, he said.

Maezawa’s departure is likely to trigger a shift from top-down management to one centered more on individual employees.

Maezawa said that he “wants to dedicate his time to training” to explore the universe. He also expressed his interest in starting a new business from scratch, without elaborating.

Zozo’s departing CEO made a name and fortune for himself by defying the norms of Japanese society. He skipped college, moved to California to play in a rock band and started his own e-commerce company.

In May, he wrote on Twitter that he would be selling more of his notable art collection to raise money.

“I myself will be setting off on a new path,” he tweeted after Thursday’s announcement.

Information from Bloomberg added

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