Yahoo Japan Corp said in a statement that it will take control of online fashion retailer Zozo for a sum of $3.7 billion (400 billion yen). This comes as the company strives to revive its website and take on rivals like Amazon.com.
Yusaku Maezawa, the founder of Zozo, informed reporters that he would discontinue his role as the chief executive officer of the company and sell off most of his shares in the company. Zozo share has dropped by 60 percent over the course of last year as a result of many missteps by the company’s management.
The takeover of Zozo by Yahoo Japan will give it an edge in the online fashion market as the acquired company has its mall Zozotown which has 50 percent market share in the mid to high range fashion products. Currently, the online fashion retail market has seen Rakuten and Amazon struggling to take the lead.
Zozo’s takeover comes as the company is in a situation where its investors are not positive about its growth prospects. This comes as the online fashion retailer did not come through as expected with its plans with personalised tailoring for customers and had trouble with brands due to discounting.
The offer from Yahoo Japan stands at 2,620 yen for each share in Zozo. This yields a premium of 21 percent as per Wednesday’s closing price of the share. However, the offer is 44 percent less than the peak price of Zozo share last year.
Yahoo Japan share price increased by 2 percent after the announcement.
Yahoo Japan’s aim is to take possession of 50.1 percent shares of Zozo which has a market capitalisation of 680 billion yen as of Wednesday.