Rakuten to Purchase Asahi Fire & Marine in $415 Million Deal

Rakuten plans to purchase Asahi Fire & Marine Insurance Co. Ltd. for about $415 million, building up its portfolio of financial services as it steps up efforts to diversify beyond the conventional online shopping.

Protecting and improving its earnings has been more important since Rakuten said in December that it would apply for a 4G mobile license, aiming to become Japan’s No. 4 wireless carrier in a strategic shift that had analysts warning of a difficult battle to gain customers.

Although Asahi Fire & Marine, majority owned by Nomura Holdings Inc., is a small player in Japan’s $76 billion property and casualty insurance market, the acquisition would make up for Rakuten’s financial offerings that also include online securities trading, credit cards and life insurance.

It would also help separate Rakuten’s services as it seeks to fend off increased competition from Amazon and Yahoo Japan Corp which has eaten into its market share.

A successful acquisition could also allow Rakuten to provide its own insurance for goods sold as well as for travel services arranged through its websites, said Rakuten spokeswoman Chiemi Kobayashi.

Rakuten said on Monday it would launch a tender offer for unlisted Asahi Fire & Marine at 2,664 yen per share. The non-life insurer has annual net premium revenue of 36.6 billion yen, while top insurers have revenues of about 2 trillion yen.

The news also came, following an announcement last week that Rakuten has struck a partnership with Wal-Mart Stores Inc for online grocery delivery services in Japan.

Helped by its massive customer base from its online shopping services, revenue from Rakuten’s financial services has grown to account for 38 percent of overall sales in the last financial year. That is just behind its domestic e-commerce business, which accounted for about 40 percent of sales.

Japan’s biggest brokerage and investment bank has been seeking to shift capital into areas where it sees more growth. It is expanding its U.S. investment banking business, with a focus on M&A advisory services as it tries to grab a bigger share of the world’s biggest investment banking fee pool.

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