Which Companies Should Yahoo Acquire

The first private lunar tourist sells his company Zozo

The Softbank subsidiary Yahoo Japan wants to buy the majority in the online fashion retailer Zozo for the equivalent of 3.7 billion Swiss francs in order to challenge Amazon in Japan and grow globally. The extravagant founder Yusaku Maezawa withdraws from Zozo's management.

He wants to be the first private individual to fly to the moon with Elon Musk's company SpaceX. But Yusaku Maezawa has landed hard in his own professional life. His founding Zozo, a global online fashion distributor, had recently suffered major setbacks. On Thursday, the eccentric Japanese billionaire operated the ejection seat.

"I will entrust Zozo to a new president and go my own way," Maezawa announced surprisingly on Twitter. And he not only gives up leadership, but also his influence. He sells a large part of the shares in the company he founded to the leading Japanese online portal Yahoo Japan, a company of the Softbank Group. Its share drops from 37% to just over 6%.

One of the largest takeovers in Japan

De facto, Maezawa and the unit of technology investor Softbank are threading one of the largest domestic Japanese takeovers in recent history. After all, Yahoo Japan plans to spend 400.7 billion yen (3.7 billion Swiss francs) on around 50.1% of the company's shares. For the takeover, the online portal is even willing to pay a premium of 21% over the previous Zozo share price.

At first glance, the deal only has winners. Above all Maezawa, who swapped his studies for an American rock band and then founding his start-up. The lavish billionaire, who spent CHF 109 million on art and a private jet upholstered by Hermès, fills his pockets again after an auction of two works from his art collection in May.

Maybe he wants to stay so liquid for other extravagances, for example golfing on a glacier, his paid-up trip to the moon with the space company of Tesla founder Elon Musk or other gifts to his four million Twitter followers. Again and again he is giving away money. He called his Twitter channel succinctly “yousuck2020”, alluding to his first name Yusaku.

Yahoo Japan clearly sees itself as a winner too. The company has been challenging Amazon and Japanese online mall Rakuten in e-commerce for several years. In 2018, the company, which will be renamed Z Holdings on October 1, achieved more than two thirds of its CHF 8.7 billion in online sales.

With the acquisition, the company suddenly boosts its sales by CHF 1 billion. The range increases more than income: Zozotown, Zozo's online mall, had 1,297 shops, 7,349 brands and 730,000 products at the end of June. Yahoo Japan justifies the purchase with expansion potential. Because in Japan alone, fashion items worth CHF 14 billion are sold in the Internet every year. Shareholders cheered Yahoo Japan's share price up 5.7% shortly after the news.

Sharp price increase

Zozo's share price even skyrocketed by more than 15%. One reason is certainly the generous purchase offer. Another is the hope that the new owners will do better business than the last founder. Maezawa has led his company into a crisis.

Maezawa had started several ambitious projects that fell on the management's feet. The company stopped shipping dotted “Zozosuits” again. These were tight-fitting suits that customers should use to measure their bodies electronically so that they can then order better-fitting clothing.

Discounts also provoked fashion brands. The expansion abroad did not progress as expected. And the number of shops fell slightly, but profits fell sharply by 22% to CHF 235 million. Board member Kotaro Sawada is now supposed to lead the company back on a growth path. Experts believe that Yahoo's financial strength could particularly help Japan expand overseas.