Benzinga | Mar 12, 2021 03:22PM EST

Rakuten Divests 8% Stake To Japan Post, Tencent, Walmart To Intensify Battle Against Amazon: Report

Japanese e-commerce firm Rakuten Inc (OTC: RKUNF) (OTC: RKUNY) is divesting an 8.32% stake to postal and banking company Japan Post Holdings Co Ltd (OTC: JPHLF) (OTC: JPPHY), expanding a logistics tie-up to counter peers like Amazon.Com Inc (NASDAQ: AMZN), Reuters reports.

* Rakuten plunged to an operating loss in 2020 as it battled Amazon in e-commerce and took on Japan's cash-rich telecoms with its mobile network.

* Friday's deal made Japan Post Holdings the biggest shareholder in Rakuten outside the founding Mikitani family and is part of a $2.2-billion (242-billion-yen) share sale to companies including Tencent Holdings Ltd (OTC: TCEHY) and Walmart Inc (NYSE: WMT).

* The proceeds would be utilized to fund expansions into AI, finance, and mobile. The alliance mainly focuses on e-commerce, followed by a partnership in mobile and other businesses, Bloomberg reports.

* Last year, the company scaled back plans to offer free shipping following regulatory scrutiny. Rakuten also expanded rapidly into wireless mobile to disrupt the industry.

* The company's wireless unit's loss nearly tripled to 227 billion yen in FY20 following network investments while offering free service to drive users.

* The arrangement united Rakuten's over 100 million members and Japan Post's last-mile access to every household and a network of 24,000 post offices. The postal group also operated a life insurance business and a bank with about 120 million savings accounts.

* The collaboration focused on creating joint logistics centers and delivery, pick-up systems, and data sharing. Post offices would form as sign-up counters for Rakuten's mobile service. They would also collaborate on cashless payments and insurance. Further details of the partnership would be revealed in April.

* Rakuten's relationship with Walmart dated back at least three years. It included collaboration on fresh produce delivery in Japan and an e-book operation in the U.S., unlike Tencent, which was still fresh.

* Rakuten and Japan Post stock rose in afternoon trade in Tokyo after the tie-up.

* Last year Rakuten acquired a 20% stake in Walmart's Japanese supermarket unit Seiyu. Rakuten's partnership with Seiyu dated back to 2018.

* Price action: RKUNF shares are trading up 5.24% at $11.04 on the last check Friday.