Rakuten buys Israeli firm Viber for almost $1 billion

The Israeli mobile application that allows users to make phone calls and send text messages for free, Viber, was bought by Japan`s biggest online retailer, Rakuten, which will pay $900 million for the Cyprus-based company.

There was a growing interest by global Internet companies in applications that enable messaging and voice communications. Earlier this month, rumors showed that a potential Chinese buyer wanted to pay around $300 million for the company.

Viber was founded in 2011 by entrepreneur and businessman Talmon Marco, having as a partner one of Israel`s largest media and file-sharing companies, iMesh; the company is registered in Cyprus but has a research and development center in Israel.

Most of Vober’s 300 million users come from Southeast Asia, especially Japan which has 90 million users, so Rakuten hopes that most of its revenue will come from its own country, where its dominance is increasingly under threat from other Internet giants.

Viber will bring 300 million of its users to Rakuten`s global network of 200 million, while the acquisition will expand the company`s services, said Rakuten chief executive Hiroshi Mikitani at a news conference in Tokyo.

Viber’s users come from 193 countries, including Brazil, Russia and Vietnam and because of the huge potential for growth in revenue and customers, especially in emerging markets, this acquisition was attractive to Rakuten, which also owns Canadian e-reader Kobo.

Buying Viber would give Rakuten access to its millions of users, who could use their phone number and password to open a Rakuten shopping account, Mikitani said. Future plans include making games available on Viber, as games provide the bulk of app revenues.

Shares in Rakuten, which have risen more than 90% over the past year, closed up 1.22% at 1,657 yen before news of the purchase was announced.