LinkShare to be acquired by Japanese portal for $425 million in cash

Performance marketing company LinkShare Corp. has agreed to be acquired by Japanese Internet portal Rakuten Inc. in a cash deal valued at $425 million. Rakuten, with a market capitalization of just under $10 billion, is regarded as the seventh largest Internet company in the world.

“Their intention is to grow their business and become a number one player around the world, and to use LinkShare as a platform and a starting point to build a much bigger business in the U.S.,” says LinkShare chairman and CEO Steven Messer.

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Messer adds that the entire senior management team, including himself and LinkShare COO and president Heidi Messer, his sister, will remain with the company to lead the continued growth of LinkShare’s core business and support Rakuten’s U.S. expansion, including exploration of potential acquisitions. The Messers were the largest stakeholders in the formerly privately-held company: Rakuten trades on the Japanese equivalent of NASDAQ.

Rakuten, founded in 1997, operates a range of consumer-facing businesses including e-commerce, portal and media, travel, and financial services. It also has a foothold in professional sports as owner of a baseball team, the Rakuten Golden Eagles. About 30% of its revenue online is from affiliate marketing, and Messer sees “a lot of synergies” between Rakuten and LinkShare Japan.

Messer says the logistics of Rakuten’s more visible presence in the U.S. will be worked out over the next several months. The deal is expected to close in four to six weeks. “We think in one or two years people here will start to understand what Rakuten is, the way they do in Japan,” he adds. “This is the first time we’ve heard about an Asian company coming to the U.S. to compete with Yahoo here.”