Viber messaging app bought by Japan's Rakuten

Hiroshi Mikitani, chief executive of Rakuten and Talmon Marco, Viber Media chief executive The heads of Rakuten and Viber announced the deal on Friday

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Messaging app Viber has been bought by Rakuten, the owner of online retailer Play.com.

The Japanese company will pay $900m (£540m) for the mobile application, which offers free calls and text messages from a mobile phone.

Rakuten, which also owns the Canadian e-reader Kobo, said the purchase would allow it to expand its digital content into emerging markets.

Viber, which is based in Cyprus, has 300 million registered users.

"This acquisition is a totally new strategy that will take Rakuten to a different level," said Rakuten's chief executive Hiroshi Mikitani.

This is a deal that tells you three things about the way the world is heading.

First, Rakuten - the biggest internet business you've never heard of - is on the march.

The Japanese e-commerce giant snapped up the games and DVD retailer play.com, then added the Kobo e-reader business, and has a big stake in the Pinterest social network, seen as an attractive advertising platform for retailers.

The purchase of Viber shows that messaging apps are hot properties right now, as investors speculate that younger people may turn away from Facebook in favour of new ways of communicating. Snapchat turned down a $3bn offer from Facebook - so you could even say the $900m Viber price tag is cheap.

But it's also another feather in the cap for Israel's hi-tech industry. While the company is based in Cyprus, its R&D centre is in Israel and its founder was chief information officer of the Israel Defence Forces before moving to the US.

Japanese money and Israeli expertise have combined to launch a new assault on the communications market.

"Developing this messaging system on our own would have been impossible, " he added.

He suggested that Rakuten users might be able to use Viber's instant messages to contact an online store while considering a purchase.

Viber's chief executive and founder, Talmon Marco, said: "This combination presents an amazing opportunity for Viber to enhance our rapid user growth in both existing and new markets.

"Sharing similar aspirations with Rakuten, our vision is to be the world's number one communications platform, and our combination with Rakuten is an important step in that direction."

'Congested market'

Rakuten has been on a buying spree over the past couple of years - purchasing Europe-based video-on-demand company Wuaki.tv in 2012, the Singaporean online TV and film streaming Viki last year and a stake in the online scrapbook site Pinterest.

Viber is particularly big in the Middle East. Its founder, Mr Marco, was the chief information officer of Israel's Defence Forces and the company's research and development centre is still based in Israel, although its head office is in Cyprus.

The US, Russia and Australia are also among its biggest markets.

Viber competes with other messaging apps such as Whatsapp, WeChat and Line.

Ian Maude, internet analyst at Enders Analysis, expects more deals in the sector.

"This is a very congested market place, with lots of growth potential," he said.

He pointed out that social messaging apps tend to be used a lot by younger people, many of whom do not use email, so for a company such as Rakuten it gives them an opportunity to promote other products, such as games, to that generation.

Rakuten also reported that full-year net profit doubled to 43.5bn yen (£255m; $427m).

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