Rakuten Bank has agreed to acquire Rakuten Card and Rakuten Securities Holdings through share deliveries, in a restructuring that will also see Mizuho Bank become a major shareholder of the online lender. The transactions were announced on Wednesday and will make both target companies subsidiaries of the bank.
Rakuten Group will transfer its shares in the two companies to Rakuten Bank in exchange for newly issued Class A non-voting shares. Mizuho Bank will also contribute its common shares in Rakuten Card to the deal, cementing a wider strategic capital and business alliance between the two banks.
SHARE EXCHANGE MECHANICS
Under the agreed terms, holders of Rakuten Card will receive 1,867 Rakuten Bank Class A non-voting shares for each Rakuten Card share, while holders of Rakuten Securities Holdings will receive 0.185 Class A non-voting shares for each share held. In total, Rakuten Bank will issue 230,890,116 new Class A non-voting shares as consideration for the two acquisitions.
The use of a dedicated non-voting share class is designed to allow the transferors to receive economic interest in the bank without triggering the voting-rights thresholds that would otherwise apply under Japanese banking regulations. Following conversion arrangements attached to the Class A shares, Mizuho Bank is expected to emerge as a major shareholder of Rakuten Bank.
By bringing the card and securities businesses inside Rakuten Bank, the group is consolidating three of its principal financial services companies under a single listed banking parent. Rakuten Card is one of Japan's largest credit card issuers, while Rakuten Securities Holdings sits atop the group's online brokerage operations.
STRENGTHENED MIZUHO ALLIANCE
For Mizuho, the transaction deepens an existing capital and business alliance with the Rakuten Group and expands its stake in one of Japan's most prominent digital banks. Mizuho Bank had already held common shares in Rakuten Card, which are being folded into the new structure alongside Rakuten Group's own contributions. The share exchange ratios of 1,867 Rakuten Bank Class A non-voting shares per Rakuten Card share and 0.185 per Rakuten Securities Holdings share set the terms on which existing holders convert into non-voting exposure to the enlarged bank.
Mizuho's move to a major shareholder position gives the megabank a larger footprint in retail digital banking, an area in which incumbents have been building partnerships and stakes in online-first players. The two lenders described the arrangement as a strengthening of their strategic capital and business alliance.
The reorganisation will require various regulatory and shareholder approvals under Japanese law before it can complete, in line with the customary process for share deliveries and major shareholder changes at licensed banks. Neither party disclosed a target closing date in the initial announcement.
Once completed, Rakuten Bank will house the group's banking, credit card and securities franchises under a single listed roof, with Mizuho holding a materially larger interest than before. Rakuten Group will remain the largest shareholder, in keeping with the ecosystem strategy that ties the financial businesses to its e-commerce and telecoms platforms. The issuance of 230,890,116 new Class A non-voting shares as consideration is one of the largest single share deliveries by a Japanese online bank and provides the mechanism for consolidating the group's financial services businesses without forcing a change in voting control at the parent level.