Amid the string of events trailing Yahoo Inc., Yahoo Japan has agreed on Tuesday to buy Japanese travel booking site Ikyu Corp. for $830 million (100.2 billion yen). The Internet business company plans to expand its range of online restaurant and travel services through the acquisition.
Yahoo Japan, the company's joint venture with Softbank Group Corp., offered Ikyu 3,433 yen per share ($28) or about 42 percent higher than Tuesday's closing value. Ikyu shares were expected to rise in the Tokyo market. Yahoo Japan meanwhile saw little change on its shares at almost 10 in the morning. The offer will be made until Feb. 3 next year, Yahoo said.
Online restaurant bookings in Japan have increased by 89 percent last year, experts at Jefferies Japan Ltd. said, but it is only accounted for only one or two percent of total reservations in the country.
Yahoo Japan also sees potential in incorporating its in-house hotel booking system with Ikyu's. Yahoo's system mainly focuses on mass market customers, while Ikyu specializes in traditional and high-end Japanese hotels.
Yahoo's investment in Yahoo Japan is equivalent to $8.5 billion. For that amount, Yahoo or Softbank could acquire 10 businesses the size of Ikyu, in Japan or India. This alternative could offer the company all kinds of new growth potential, experts said.
Yahoo Japan's deal with Ikyu is the company's second ever since Nikesh Arora took the seat as chairman in June this year. Arora is also the president of Softbank.
The deal will be synergetic, as Yahoo Japan said it will help Ikyu boost its core markets of restaurant and hotel bookings.
As one of Japan's main go-to Web portals, Yahoo Japan is diversifying by investing in companies such as Sony Corp. and Buzzfeed Inc. The company has been operating its own travel service for 18 years, and the service will get a revamp in February to operate hotel reservations directly.
Masafumi Mori, president of Ikyu, will sell his 41 percent stake. Mori Trust, the second largest share-holder in the company, will also sell its shares.
Yahoo plans to spin off its 35.5 percent shares, as well as its other properties. Yahoo Japan shares have increased 14 percent this year.
