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Business

Yahoo Japan buying travel site owner Ikyu

Yahoo Japan President Manabu Miyasaka, left, shakes hands with Ikyu President Masabumi Mori in a news conference Tuesday.

TOKYO -- Yahoo Japan will purchase travel website operator Ikyu for about 100 billion yen ($818 million), hoping to bolster its own online booking business as it adapts to the shifting digital landscape.

     Under a deal announced Tuesday, the Internet portal giant will buy all Ikyu shares for 3,433 yen apiece in a tender offer running from Dec. 16 to Feb. 3. Ikyu is expected to delist.

     Ikyu handles reservations for luxury hotels, inns and restaurants and boasts roughly 4.13 million members. Founder and President Masabumi Mori is its top shareholder, with a 41% stake. Mori will step down Feb. 10, with Executive Vice President Jun Sakaki replacing him. Yahoo Japan President Manabu Miyasaka is slated to become Ikyu's chairman.

     Yahoo Japan's business model relies heavily on advertising on its home page, which features news, weather and other content. Ad money makes up roughly 70% of total sales, with the rest coming partly from service fees generated by its auction site.

     But with the rise of smartphone apps serving the same functions as Yahoo Japan portals, the flow of ad money will likely slow. The company has had to find other drivers of revenue.

     The company has developed its e-commerce segment, which includes such services as Yahoo! Shopping and Yahoo! Travel. It has let businesses list for free on its virtual marketplace since 2013, hoping to make gains against more established e-tailers like Rakuten and Amazon.com. But it is still playing catch-up with the likes of Rakuten Travel and Jalan, a hotel site affiliated with Recruit Holdings.

     Ikyu is king of the hill in online luxury hotel reservations, Yahoo Japan Executive Vice President Takao Ozawa said. The acquisition will thus give Yahoo Japan's booking operations a shot in the arm.

     Yahoo Japan's hotel-booking service concentrates mainly on business hotels and large ryokan traditional inns. But it offers only a meager lineup of city hotels and high-class ryokan -- Ikyu's specialties.

     Ikyu's listings of fancy eateries are expected to strongly complement Yahoo Japan's restaurant-booking service, which focuses on izakaya pubs.

     "Online reservations for eateries make up 1% of the total, providing ample room for growth," Miyasaka said.

     Unlike Yahoo Japan, Ikyu pockets service fees from restaurants and hotels when reservations are processed. This will likely add to Yahoo Japan's revenue.

(Nikkei)

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