The Japanese e-commerce company Rakuten, Inc. has reached an agreement with Indigo Books & Music to purchase all outstanding shares of international ebook retailer Kobo Inc. for $315 million in an acquisition that is expected to close in the first quarter of 2012. When the deal is completed Kobo will keep its headquarters in Toronto and Kobo CEO Michael Serbinis will continue direct the firm as a standalone company.
Heather Reisman, chair of Kobo and CEO of Indigo, its parent company, said that despite the sale, Indigo expects to “maintain a very strong relationship with Kobo, supporting the products and the services both in store and online and directly benefiting from the growth of the Canadian eReading market.” The Canadian book retailer expects to receive about $140 million to $150 million from the proceeds of the sale.
Reisman continued, "From start up, only 24 months ago, to becoming a strong global player with a unique reading experience and one of the largest multi-language eReading catalogues in the world, Kobo is now among the world leaders in the emerging eReading industry. The success of KOBO confirms that Indigo is a great brand and a strong platform on which we can continue to innovate and grow."
In a phone interview Serbinis said the acquisition would "accelerate our growth and global expansion.” Rakuten, Serbinis said, has more than 50 million customers around the world and a market capitalization of about $15 billion. “We’re gaining a lot of financial muscle as well as well international distribution and other synergies. This really reinforces our connection between commerce and content with social media as bridge.” Serbinis said Kobo has gone from “$0 to $100 million in sales in our first year and we’re just in our second year. We’re growing at the rate of 300 to 400% a year.”
Serbinis said that much like its recent initiatives in Germany, U.K. and the rest of Europe, Kobo would launch a localized Japanese-language Kobo e-book store “in early 2012” in Japan along with the full suite of Kobo digital e-ink readers and the newly released color tablet device, the Kobo Vox. “We’re planning on launching the whole Kobo e-book eco-system; with apps, games and Japanese content, including manga, which is a big part of the Japanese publishing market.” Indeed Serbinis added, “We intend to do a lot on graphic novels in general on the vox.”
Rakuten is an international e-commerce company with holdings in travel, banking, media and online marketing. The acquisition gives the firm a major stake in the global distribution of original digital content. Rakuten owns Buy.com in the U.S. as well e-commerce ventures in Brazil, Taiwan, China, Thailand, Indonesia and Japan. The company is based in Tokyo and has about 10,000 employees worldwide.
Hiroshi Mikitani, chairman and CEO of Rakuten, said, “We are very excited about this next step. Kobo provides one of the world’s most communal eBook reading experiences with its innovative integration of social media, such as Facebook and Twitter; and Rakuten offers Kobo unparalleled opportunities to extend its reach through some of the world’s largest regional e-commerce companies.”
E-book retailer Kobo was originally launched as a digital branch of Indigo. In 2009, Kobo was spun off as a separate company with Indigo as its major shareholder. Since that time, Kobo has moved to aggressively enter the international e-book marketplace, introducing its own suite of e-ink reading devices and most recently staking a claim in the tablet e-reader market with the release of the Kobo Vox, a 7 inch full color backlit multimedia tablet device running the Android OS. Kobo claims to offer more than a million for-pay e-book titles and access to a total of about 2.5 million e-book titles.
Serbinis called the acquisition “a perfect match. We share a common vision of creating a content experience that is both global and social. Rakuten is already one of the world’s largest e-commerce platforms, while Kobo is the most social eBook service on the market. This transaction will greatly strengthen our position in our current markets and allow us to diversify quickly into other countries and e-commerce categories.”