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Chairman and Chief Executive of e-commerce operator Rakuten Inc Hiroshi Mikitani speaks during a news conference in Tokyo February 14, 2014. Japanese e-commerce company Rakuten Inc said on Friday it will buy instant messaging app provider Viber Media Ltd for $900 million, hoping to tap the Cyprus-based company's rapidly expanding business in emerging markets. (YUYA SHINO/REUTERS)
Chairman and Chief Executive of e-commerce operator Rakuten Inc Hiroshi Mikitani speaks during a news conference in Tokyo February 14, 2014. Japanese e-commerce company Rakuten Inc said on Friday it will buy instant messaging app provider Viber Media Ltd for $900 million, hoping to tap the Cyprus-based company's rapidly expanding business in emerging markets. (YUYA SHINO/REUTERS)

E-commerce giant Rakuten bids $900-million for Viber chat app Add to ...

Japanese e-commerce giant Rakuten Inc., controlled by billionaire Hiroshi Mikitani, will buy call and messaging app provider Viber Media Inc. for $900-million in a deal that would more than double the number of users in its digital empire.

Viber is one of the top five most downloaded smartphone phone call and messaging apps, and counts the United States, Russia and Australia among its biggest markets.

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Rakuten offers services from financing to shopping to online video on its e-commerce platform, the largest in Japan. But in the face of a shrinking population and weak consumer spending at home, Mikitani is trying to re-invent Rakuten as a one-stop-site for a global audience.

Privately held Viber, run from Cyprus by Israeli entrepreneur Talmon Marco, will add 300 million users to Rakuten’s existing 200 million users, Mikitani told reporters in Tokyo.

“This acquisition... will take Rakuten to a different level,” said Mikitani, who is also the company’s chief executive. The all-cash deal was announced after Rakuten reported an 80 per cent jump in its 2013 operating profit.

“Developing this messaging system on our own would have been impossible,” he added, saying Rakuten users could, for example, use Viber’s instant messages to contact an online store while considering a purchase.

Viber chief executive Marco told the same media conference Rakuten’s acquisition would help his company become a platform for digital content, not just a provider of free voice calls and messages.

A plethora of messaging apps, including the likes of Viber, are seeking to capitalize on the appeal of their free services, especially in emerging markets.

Viber is funded from the pockets of its founders and several private investors from the United States. It competes with instant messaging apps such as WeChat, a unit of Chinese Internet firm Tencent Holdings Ltd, U.S. rival WhatsApp, and Line, owned by Korean company Naver Corp.

Viber recently launched an instant messaging app for personal computers that allows users to make outgoing mobile calls to other Viber users and non-registered mobiles, making it a rival to Skype.

The acquisition by Rakuten is expected to be completed by the end of March, both companies said.

Rakuten’s e-commerce platform, Rakuten Ichiba, is the sixth largest in the world by sales.

The company puts a premium on its ability to communicate with customers. Last year, Mikitani told Reuters this personal touch will give Rakuten the edge over rivals like eBay Inc. and Amazon.com Inc. in Europe, where recession-hit retailers are struggling to tempt clients to spend.

Rakuten has spent big in recent years on a variety of overseas purchases to broaden its businesses and reach under what Mikitani calls its “Rakuten Ecosystem” strategy.

The company has acquired e-commerce providers from Brazil to Germany, as well as Toronto-based eReader business Kobo and online video providers Wuaki.tv of Spain and Viki of Singapore. In 2012, it made a large investment in website Pinterest.

Strong profit growth has contributed to its spending firepower.

In the 12 months ended December 31, Rakuten’s operating profit jumped 80 per cent to 90.2 billion yen ($882.89-million), marking a sixth consecutive year of record earnings, though lagging the average 99.9 billion yen projected by 18 analysts polled by Thomson Reuters Starmine.

Net profit doubled to 43.5 billion yen, while revenue rose 30 per cent to 518.6 billion yen.

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