Pinterest Stake Fuels Rakuten's Quest to Be a Global Player

Facebook (FB) isn’t the only Silicon Valley social networking company making news.

On Thursday, the same day Mark Zuckerberg’s company announced it had raised $16 billion in the biggest IPO by a technology company, Japanese e-commerce company Rakuten (4755) announced it is leading a group to invest $100 million in rival Pinterest. The deal gives a valuation of about $1.5 billion to the Palo Alto (Calif.)-based startup, which operates a site that allows users to share photos on virtual bulletin boards.

Rakuten is big in Japan, but with the economy in the doldrums and the population aging rapidly, the company can’t rely on the home market to fuel its growth. Hence, Chairman and Chief Executive Officer Hiroshi Mikitani’s campaign to transform Rakuten into a global player that can compete in the U.S. and elsewhere against the industry’s heavy hitters. Mikitani has made English the official language of the company. Rakuten, which acquired Buy.com in 2010, last November announced the purchase of Kobo, the e-reader that is No. 3 in the U.S. behind Kindle and Nook. He’s made deals in Europe and Asia. And now there’s the investment in Pinterest.

Mikitani is not your usual staid Japanese CEO. Ranked No. 161 on the Forbes rich list, Mikitani is a 47-year-old entrepreneur with an MBA from Harvard who gave up a career in banking to launch Rakuten in 1997. Today it’s the country’s biggest cybermall. Mikitani is also chairman of Rakuten Baseball, which owns the Pacific League team the Tohoku Rakuten Golden Eagles. The team is based in Sendai, the northeastern city that was hit hard by last year’s earthquake and tsunami. After the disaster and the crisis at the Fukushima nuclear power plant, Mikitani quit the Keidanren business lobby to protest its support for Japan’s continued reliance on nukes.

Mikitani has had his setbacks. For instance, he tried to get a piece of the booming Chinese market by teaming up with search engine Baidu (BIDU), but that partnership went nowhere and last month Rakuten announced it was giving up on the business. After buying Kobo, which is well ahead of Nook outside the U.S., Rakuten figured it had a clear shot at being the main alternative to Amazon (AMZN) worldwide. That was before Microsoft (MSFT) and Barnes & Noble (BKS) joined forces. With the software giant now allied with the U.S. bookseller, the Nook stands to be a much more formidable competitor.

How does Pinterest fit into Mikitani’s plans? Mikitani says there’s a lot of overlap between e-commerce and social networking. Taking a page from Pinterest’s playbook, Rakuten will soon add “pin it” buttons on its site so users can share pictures of would-be purchases.

“While some may see e-commerce as a straightforward vending machine-like experience, we believe it is a living process where both retailers and consumers can communicate, discover, and curate to make the experience more entertaining,” he said in a May 17 statement. “We see tremendous synergies between Pinterest’s vision and Rakuten’s model for e-commerce. Rakuten looks forward to introducing Pinterest to the Japanese market as well as other markets around the world.”

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TeliaSonera Boosts Kcell Stake for $1.52 Billion Before IPO

December 22, 2011, 8:36 PM EST By Kim McLaughlin

(Updates with ownership details in second paragraph, analyst comment in fourth.)

Dec. 22 (Bloomberg) -- TeliaSonera AB, Sweden’s largest telephone company, will take over its Kazakh business for $1.52 billion before holding an initial public offering for the unit as it seeks to reduce dependence on saturated home markets.

TeliaSonera, which owns 51 percent of GSM Kazakhstan LLP through a venture with Turkcell Iletisim Hizmetleri AS, agreed to buy the remainder from Kazakhtelecom, the Central Asian nation’s fixed-line phone monopoly. It plans to sell a 25 percent holding of the operator in an initial public offering next year, TeliaSonera said today.

TeliaSonera has cut jobs and trimmed expenses in Sweden and Finland as subscribers shift from fixed-line subscriptions to smartphones, and focused on faster growing regions. Tero Kivisaari, the company’s president for central Asia, said June 14 it aims to keep revenue growth in the area in double digits even as long-term growth may slow as markets like Azerbaijian and Kazakhstan near 100 percent mobile penetration.

“They are buying an asset they know well for what seems like a good price,” said Stefan Gauffin, an analyst at Nordea Bank AB who recommends buying TeliaSonera shares. “The expected growth in Kazakhstan will outstrip the current company average.”

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The price TeliaSonera pays is about 4.6 to 4.7 times the phone company’s 2011 projected earnings before interest, taxes, depreciation and amortization, said Gauffin. Peers in the emerging markets are trading at about 5.5 times earnings, he said.

TeliaSonera, formed in a 2002 merger between the former Swedish and Finnish phone monopolies, slid 0.5 percent to 44.79 kronor at 11:49 a.m. in Stockholm. The stock has dropped 16 percent this year, valuing the company at 194 billion kronor ($28 billion)

TeliaSonera controls 51 percent of GSM Kazakhstan through its 58.55 percent ownership in Fintur Holdings B.V., the venture with Turkcell, Turkey’s biggest mobile-phone company. TeliaSonera owns 38 percent of Turkcell.

“This agreement is another step in the execution of our strategy of increasing ownership in core holdings,” Kivisaari said in a statement.

Kcell’s IPO is expected to be completed next year, TeliaSonera said. Depending on the share-price development after the sale, the Swedish company may make an additional payment to Kazakhtelecom, it said. Kcell has about 50 percent of the Kazakh market and some 8.9 million subscribers, according to TeliaSonera’s website.

Turkcell Stake

After the IPO, TeliaSonera will hold an effective stake of 61.7 percent in the operator, it said today.

TeliaSonera and Russia’s Alfa Group are embroiled in a dispute with Cukurova Holding over control of Turkcell and have pressed for the replacement of Chairman Colin Williams. The dispute has prevented the approval of dividends from last year’s profit. A Turkcell spokesman couldn’t immediately be reached for comment.

Kazakhstan, the former Soviet Union’s second-biggest energy producer, plans to sell shares of state-owned companies to citizens in IPOs, Economic Development and Trade Minister Kairat Kelimbetov said in a Sept. 16 interview.

--With assistance from Aydan Eksin in Istanbul. Editors: Kenneth Wong, Simon Thiel

To contact the reporter on this story: Kim McLaughlin in Stockholm at kmclaughlin6@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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Yahoo May Cut Its Alibaba Stake

By Tom Giles and Douglas MacMillan

(Bloomberg) — Yahoo! Inc. is considering cutting its 40 percent stake in Alibaba Group Holding Ltd. to about 15 percent, two people briefed on the matter said.

The Yahoo board is scheduled to meet later today to consider the transaction, said the people, who asked to remain anonymous because the deliberations are private. The deal, which may let Alibaba repurchase the stake in a tax-free manner, values the Asian assets at about $14 a Yahoo share, or more than $17 billion, one of the people said. Yahoo also would sell all of its stake in Yahoo Japan Corp. in the deal, this person said.

Alibaba stepped up efforts to buy back the stake after the September ouster of Yahoo Chief Executive Officer Carol Bartz, who had opposed a sale. Yahoo, buffeted by user attrition and search-market share losses to Google Inc., is also considering proposals by private-equity firms seeking to buy minority stakes.

Yahoo acquired the Alibaba stake for about $1 billion in 2005.

Dana Lengkeek, a spokeswoman for Sunnyvale, California-based Yahoo, declined to comment, and John Spelich, a spokesman for Alibaba, didn’t immediately return a request for comment left outside Asian business hours.

Yahoo gained 5.8 percent yesterday after the New York Times initially reported that Yahoo is considering reducing its stake in Alibaba in a tax-free deal valued at about $17 billion. It closed in New York at $15.99.

The transaction has a complicated structure and may take several weeks to complete, a person with knowledge of the matter said. Alibaba and Softbank Corp., the co-owner of Yahoo Japan, are seeking to repurchase stakes held by Yahoo without triggering taxes associated with the gains on the investments.

To help do that, Alibaba and Softbank each would create a standalone entity, investing cash and operating assets in each, another person said. Yahoo would then exchange all of its stake in Yahoo Japan and most of its stake in Alibaba for those new entities, this person said. Yahoo would retain 15 percent of Alibaba, this person said.

Fumihiro Ito, a spokesman for Softbank, declined to comment.

Yahoo has also considered offers for a minority stake from bidders including TPG Capital and a group led by Silver Lake, people familiar with the matter have said. Silver Lake’s bid valued Yahoo at about $16.60 a share, these people said. TPG Capital’s offer was higher, they said.

Yahoo investors, including Di Zhou, a Santa Fe, New Mexico- based analyst at Thornburg Investment Management, have said they would prefer that the company be sold in its entirety, at a higher price.

The New York Times previously reported that Yahoo is considering reducing its stake in Alibaba in a tax-free deal valued at about $17 billion.

With Serena Saitto and Kazuyo Sawa

Giles is editor of the Technology channel on BusinessWeek.com. MacMillan is a reporter for Bloomberg News and Bloomberg Businessweek in San Francisco.

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Deutsche Telekom Says No Scope for Talks on Greek OTE Stake

May 11, 2011, 6:13 AM EDT By Cornelius Rahn

(Updates with visit to Greece in fourth paragraph.)

May 11 (Bloomberg) -- Deutsche Telekom AG said there is “no scope for negotiations” if the Greek government chooses to use an option to sell another 10 percent stake in Hellenic Telecommunications Organization SA to the German company.

“If the Greek government wants to sell us the stake, it will do so,” said Andreas Leigers, a Deutsche Telekom spokesman, after Financial Times Deutschland reported the company is trying to postpone the purchase. The phone operator is standing by its obligations in the shareholders’ agreement, Leigers said, adding that there are no plans to buy additional shares in the company, also known as OTE, in the market.

Greece said Apr. 15 that it wants to sell its 20 percent OTE stake this year as part of a 50 billion-euro ($72.1 billion) asset sale plan to cut the highest debt ratio in the European Union. It has the right to sell 10 percent to Deutsche Telekom at 15 percent above the average market price of the past 20 days by the end of 2011, Leigers said.

Deutsche Telekom’s management and supervisory board will travel to Greece at the end of May, Leigers said. The visit will involve a meeting with local executives.

Deutsche Telekom, with a 30 percent stake, fully consolidates OTE, determines its management, and has the right of first refusal for the remainder of the government holding. The stock rose 2.1 percent to 7.15 euros as of 11:45 a.m. in Athens trading today, valuing the government’s stake at about 700 million euros.

--Editors: Simon Thiel, Robert Valpuesta.

To contact the reporter on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net

To contact the editor responsible for this story: Angela Cullen in Frankfurt at acullen8@bloomberg.net

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