Share price soars 22%! Japan's Rakuten and Post reach capital cooperation

As the coronavirus pandemic stimulates demand for e-commerce and home delivery services in Japan , Rakuten , a Japanese e-commerce giant , is facing competition from powerful rivals such as Amazon as it grows .

Japan's Rakuten said on Friday it would sell about 131 million new shares to Japan Post , raising 150 billion yen ($1.38 billion) from Japan Post Holdings .

Japan Post President and CEO Hiroya Masuda and Rakuten Inc. Chairman and CEO Hiroshi Mikitani

Image source: Kyodo News Agency

The transaction is expected to be completed on March 29, when Japan Post will acquire 8.32% of Rakuten's shares. Through this financing, Japan Post will also become the second largest shareholder of Rakuten Japan, second only to the family of founder Hiroshi Mikitani.

" The capital alliance will make the relationship between the two groups even stronger and serve as a driving force for expanding cooperation , " Japan Post President and CEO Hiroya Masuda said at a news conference .

In December last year , Rakuten reached a basic agreement with Japan Post Co., the postal service arm of Japan Post , to improve logistics efficiency .

The partnership will deepen the existing logistics alliance established by the two parties last year , allowing Rakuten to fully utilize the postal giant's nationwide delivery network , connecting Rakuten's more than 100 million member users with Japan Post 's nationwide delivery coverage .

Under the partnership, Rakuten and Japan Post will share customer data and jointly develop self-driving robots and drones to address Japan's shortage of courier workers.

Rakuten and Japan Post will also study partnerships in mobile and other business areas. It is reported that Rakuten plans to accept subscriptions for its mobile services through Japan Post's approximately 24,000 post offices across the country , and the two parties will jointly explore cooperation in areas such as cashless payments and insurance products , but more details of the cooperation have not been disclosed.

"IT giants such as Google, Apple, Facebook and Amazon.com have become powerful in globalization, and we hope to create a new form by combining their strengths in the real and online fields," Rakuten Chairman and CEO Hiroshi Mikitani said at a press conference.

It is also under this intention that Rakuten Japan raised 92.35 billion yen from Image Frame Investment (HK), a wholly-owned subsidiary of Tencent Holdings Limited, and Walmart Inc. (Walmart) in this capital financing cooperation, in addition to the approximately 150 billion yen of shares sold to Japan Post . The total amount of Rakuten's financing this time is as high as 242.35 billion yen ( about 2.2 billion US dollars ) .

As soon as the news of the cooperation came out, Rakuten 's stock price in Japan immediately soared 11%, the largest intraday increase since February 2017 , and eventually rose 22.7%, setting the highest closing price on the Tokyo Stock Exchange since 2002 .

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