Rakuten, a large Japanese e-commerce company, said Thursday it will acquire Buy.com for $250 million. The move will give Rakuten a larger footprint in the U.S.
Rakuten offers more than 60 million products and has more than 35,000 merchant partners. In 2005, the company made its first U.S. move via the purchase of LinkShare, but has largely focused on Asia. For instance, Rakuten and Baidu formed an e-commerce joint venture in China earlier this year.
The acquisition of Buy.com (Techmeme) closes the loop on an entertaining corporate history. Buy.com formed in 1997 and had the bright idea to sell items at a loss and make up the difference with advertising and services. Founder Scott Blum sold Buy.com to Softbank for $195 million. The company went public in 2000 and in 2001 Blum bought the company back and took it private for 17 cents a share. Blum's timely exit and re-entry may have been one of the better cases of investment timing in dot-com history.
Buy.com's IPO filing in 1999---complete with an audit from Arthur Andersen---foreshadowed what would happen to the company without Blum. Blum's departure was listed as a risk factor since he created the company, recruited management and cooked up the business model.
With Blum back at the helm, Buy.com was on better footing. In 2002, Buy.com expanded into more categories to fashion itself as an Amazon killer of sorts. In 2006, Buy.com created BuyTV and created a marketplace for third party sellers. On March 4, Buy.com said that the fourth quarter was its 13th consecutive profitable quarter.
Now Rakuten sees Buy.com as an innovative way to enter the U.S. market. In a statement, the two companies said they will "deploy product innovations across its global platform."
Rakuten's has a sprawling business. The company sells books and other goods, has a credit card and e-money unit and dabbles in banking. In addition, the company has travel, securities, telecom and professional sports businesses.
Here's how large Rakuten is: Its most recent earnings report presentation had 81 slides. A look at Rakuten's businesses: