In a move to strengthen its global presence in the digital marketplace, Japan’s Rakuten, Inc., has agreed to acquire OverDrive for $410 million in cash. The deal is expected to close in April.
OverDrive founder and CEO Steve Potash will stay and continue to direct OverDrive operations. OverDrive will retain its brand name while operating under Rakuten USA, the U.S. division of Rakuten Inc.
Based in Cleveland, OverDrive was one of the first companies to get deeply involved in supplying digital content to libraries, first with audio and then e-books. Its digital distribution platform now has more than 2.5 million titles and OverDrive has relationships with 5,000 publishers and 30,000 libraries, schools, and retailers. According to Rakuten, OverDrive had EBITDA of $25 million last year and its addition to the company’s e-book business will bring that unit closer to breakeven in 2015. In 2012, Rakuten acquired the Canadian-based e-book publisher Kobo, which has struggled to turn a profit.
Takahito Aiki, head of Rakuten’s global e-book business, commented: “OverDrive’s deep content library and relationships with publishers, libraries, schools, and retailers will allow Rakuten to extend our mission of empowerment to new market segments and accelerate the growth of our digital content businesses.”
Rakuten has revenues of $22.8 billion and is one of the world’s largest Internet service companies operating in three main areas: digital content, e-commerce, and finance. In addition to acquiring Kobo, Rakuten has continued to grow its digital contents businesses, adding video streaming service Wuaki.tv in 2012 and global TV and video site Viki in 2013.