Rakuten's Viber purchase sparks share sell-off

Shares in Rakuten, the Japanese online retailer controlled by billionaire Hiroshi Mikitani, plunged in Tokyo trading after the company announced plans to buy the Viber internet messaging and calling service for US$900 million.

The deal adds to Rakuten's recent acquisitions of stakes in social-network operator Pinterest and digital book seller Kobo, as Mikitani tries to boost sales after missing analyst estimates for two straight years. Losses at overseas operations and new businesses were approaching levels that might test investors' patience, Kuni Kanamori, an analyst at SMBC Nikko Securities, said in a note.

"The deal is large and comes despite the absence of contraction in Kobo operating losses.

"As we had hoped to see shrinking losses on M&A projects overseas, the deal leaves a negative impression."

Rakuten shares fell 9.5 per cent, the most in more than four months, to close at 1,499 yen yesterday, wiping out more than US$2 billion in market value.

With Viber, Rakuten will be competing with Naver Corp's Line service and Tencent WeChat, which both combine instant messaging with shopping and gaming, and Microsoft's Skye service.