KDDI could invest as much as 100 billion yen ($914 million) for a stake close to 50%.
With its telecommunications business flagging, KDDI is hurrying to develop financial services as its next pillar of earnings.
Kabu.com ranks fifth among online brokerages in Japan, strong in such retail services as stock trading. It became a subsidiary of Mitsubishi UFJ Financial Group in 2007. MUFG unit Mitsubishi UFJ Securities Holdings currently controls 52% of the brokerage, and group company MUFG Bank owns another 6%.
KDDI is expected to buy Kabu.com shares over a few months through a tender offer. It intends to finalize the offer price and target stake as soon as February. It appears likely that Kabu.com will be delisted from the first section of the Tokyo Stock Exchange.
As part of efforts to beef up financial services, KDDI formed internet bank Jibun Bank in 2008 as a 50-50 venture with MUFG Bank. KDDI then bought into Lifenet Insurance in 2015, followed by a foray into smartphone-based asset management through last year's tie-up with Daiwa Securities Group.
With a bank, a life insurer and a brokerage under KDDI's umbrella, the creation of a financial holding company to oversee the additions may follow. In addition to investing in Kabu.com, KDDI apparently is in talks with MUFG to obtain a larger stake in Jibun Bank.
Kabu.com has roughly 1.1 million securities accounts, while KDDI boasts 53 million subscribers for its au mobile service. KDDI seeks to take advantage of its extensive client base to tap fresh demand for financial services.