Japanese e-commerce giant Rakuten Inc. will raise 150 billion yen ($1.38 billion) from Japan Post Holdings Inc. in a capital tie-up intended to boost competitiveness in logistics, online shopping and other digital services, the companies said Friday.
The tie-up will enable Rakuten, known for its online shopping mall, to make the best use of the nationwide delivery network of the postal giant, which also has banking and insurance units. The company is also seeking to bring digital transformation to the logistics business.
Rakuten has faced competition from rivals such as Amazon.com Inc. at a time when the coronavirus pandemic has boosted demand for e-commerce and home delivery services.
Rakuten plans to sell about 131 million new shares to Japan Post, with the transactions expected to be completed on March 29, leading Japan Post to acquire an 8.32 percent stake in Rakuten.
"As IT giants, mainly centering on GAFA, have become powerful amid globalization, we hope to create a new form by combining the strengths each has in the real and online spheres," Rakuten Chairman and CEO Hiroshi Mikitani said at a press conference.
GAFA stands for the four American tech giants, Google LLC, Apple Inc., Facebook Inc. and Amazon.com.
Under the partnership, Rakuten and Japan Post aim to share customer data and jointly develop self-driving robots and drones to cope with the country's shortage of delivery staff.
Rakuten plans to accept subscriptions for its mobile service through some 24,000 postal offices Japan Post runs across the nation.
Rakuten incurred a huge net loss in the 2020 business year that ended Dec. 31 due to increased investment in infrastructure for its mobile phone service as it seeks to compete with bigger rivals by offering low fees.
"The capital tie-up will make the relationship between the two groups even stronger and become a driving force for expanding cooperation," Japan Post President and CEO Hiroya Masuda said at the press conference.
Japan Post and Rakuten said they will explore cooperation in areas such as cashless payments and insurance products, without giving further details.
On top of about 150 billion yen from Japan Post, Rakuten will also raise a combined 92.35 billion yen from Walmart Inc. of the United States and Image Frame Investment (HK) Ltd., a group company of Chinese tech giant Tencent Holdings Ltd., bringing the total to 242.35 billion yen.
In December, Rakuten reached a basic agreement with Japan Post Co., the postal service unit of Japan Post, to improve the efficiency of their logistics.
