Japanese Internet giant snags Viber for $900m

Viber, the Israeli-founded video and voice communications app, has been acquired by Japanese Internet services company Rakuten for $900 million. Rakuten, an electronic commerce and Internet company, is the largest e-commerce site in Japan, and one of the largest in the world.

The app, that allows users to make free phone and video calls within its network, has over 200 million users all over the world, including many in Arab countries – exceptional for an app that was created in Israel. Although the company is currently based in Cyprus, its R&D center remains in Israel. Viber was released about three years ago and positioned by company CEO Talmon Marco as an alternative to Skype.

With Viber, Rakuten CEO Hiroshi Mikitani said, his company hopes to expand its e-commerce reach with enhanced communications capabilities. “In the future, e-commerce will become a more communication-based transaction,” Mikitani said. “Live interactivity is going to be critical for all Internet services.”

In a statement, Marco said that Viber would now have access to a large and growing market. “There was a sense that we can accelerate the growth of our company by tapping into Rakuten’s user base in various countries,” Marco said. “We would be able to continue to build Viber, continue to maintain the mentality and speed of a startup while having support.”

The Viber buyout represents the third major buyout of Israeli-founded tech companies in a year. In June 2013, Google purchased Israeli traffic and mapping app Waze for nearly a billion dollars, with IBM paying a similar amount in August to acquire Trusteer, an Israeli cyber-security company.

The Viber deal also represents the first major purchase of an Israeli tech start-up by an Asian company. Although there have been several buyouts of Israeli companies by Asian ones – such as last year’s purchase of Israeli laser start-up Nextec by China’s Hans Laser – such deals have been rare. The only other large-scale deal involving Asia and an Israeli company was ChemChina’s 2011 purchase of Makhteshim Agan Industries, a long-established crop protection company, for $2.83 billion.

Earlier in the week, Marco denied that Viber was in talks for a buyout. Israel’s Calcalist business daily had reported that Viber was to be purchased by an Asian messaging company for $300 million. Asked about the rumor by a reporter from the Reuters news service, Marco said “I have no idea what this is about.”

Tamar Ayalon, a business and communications consultant who has been very active in building relationships between Israeli and Asian companies, said that the Viber deal could be a sign of things to come. “As money and influence shift from West to East, more Israeli companies are realizing that there are great business opportunities in Asia. I am sure we will be hearing about many more such deals in the future,” Ayalon added.