Yahoo Japan nears deal for majority stake in Zozo

Yahoo Japan shares rose as much as 5.7% in Tokyo, the biggest intraday jump since May 9. (Reuters pic)

TOKYO: Yahoo Japan Corp agreed to take a majority stake in the country’s online fashion shopping site Zozo Inc, stepping up competition against Amazon.com Inc and Rakuten Inc in e-commerce.

The cost of the acquisition will be as high as 400.7 billion yen (US$3.7 billion), giving Yahoo Japan 50.1% of Zozo, in a tender offer supported by founder Yusaku Maezawa, who will sell some of his own shares, according to a statement.

Yahoo Japan offered 2,620 yen per share, a 21% premium to yesterday’s closing price, sending shares soaring.

Maezawa will step down as the chief executive officer of Zozo today, to be replaced by its director Kotaro Sawada.

The deal is likely to bolster the prospects in e-commerce of Yahoo Japan, whose biggest shareholder is Softbank Corp, the domestic telecom operation of Masayoshi Son’s SoftBank Group Corp’s empire.

Zozo, which had a market cap of 675 billion yen before the announcement, has carved out a niche in online fashion against aggressive rivals like Amazon.

“It’s a plus for Yahoo Japan and would help expand their e-commerce operations,” said Mitsushige Akino, an executive officer with Ichiyoshi Asset Management Co in Tokyo.

“Zozo get the financial back up it needs for its new venture and overseas expansion.”

Yahoo Japan shares rose as much as 5.7% in Tokyo, the biggest intraday jump since May 9. Zozo, which closed at 2,166 yen yesterday, surged as much as 19%.

Maezawa has been one of the country’s most colourful and flamboyant entrepreneurs.

He has poured hundreds of millions of dollars into everything from Basquiat paintings to a Hermès-upholstered private jet, and he has also made a down payment for a ride on Elon Musk’s rocket around the moon.

In May, he said on Twitter that he’s selling more of his notable art collection to raise money.

“I myself will be setting off on a new path,” he tweeted after the announcement.

Maezawa will hold a briefing at 5.30pm in Tokyo on Thursday.

Maezawa had been investing in developing a custom clothing brand, seeking to attract customers with innovative ways of taking individual measurements.

His company shipped about 3 million so-called Zozosuits, polka-dot spandex suits for taking body measurements with the help of a smartphone, however, the business was shut down in March.

He also said the company plans to launch a foot-measuring device called Zozomat in the fall.

Zozo’s departing CEO made a name and fortune for himself by defying the norms of Japanese society.

He skipped college, moved to California to play in a rock band and started his own e-commerce company. He built shopping website Zozotown, a popular destination for younger consumers, from a mail-order music album business.

Maezawa has a net worth of US$1.5 billion, according to the Bloomberg Billionaires Index.

“Yes, I have no money. I spend it so quickly,” he tweeted in May – with a smiley face – when asked about his finances.

He later said he needs funds to finance more lavish cash giveaways to his Twitter supporters, which have earned him millions of followers.