Official Statement and CEO Letter: OverDrive Sold to Rakuten For $410 Million in Cash
OverDrive was sold to Rakuten, a Japanese company today for $410 million. It’s a cash deal and is scheduled to close next month (April 2015). Overdrive will be part of Rakuten USA. Rakuten is an e-commerce company headquartered in Japan. Here’s a list of Rakuten’s major businesses.
The Rakuten announcement notes that OverDrive achieved EBITDA of US$25 million in FY2014.
Rakuten acquired ebook reader company Kobo in November 2011. Rakuten.com also acquired Buy.com a number of years ago and is noted below owns a number of other digital content services.
Here are highlights from the OverDrive’s official announcement along with the full text of a letter to library partners by OverDrive CEO, Steve Potash, and an OverDrive/Rakuten acquisition FAQ. We’ve also included material from Rakuten’s statement.
From the OverDrive News Release:
OverDrive, Inc. today announced it entered into an agreement to be acquired by Rakuten Inc., one of the world’s largest Internet services companies. Insight Venture Partners has been the majority shareholder of OverDrive since 2010.
OverDrive will operate as a subsidiary of Rakuten USA and will work closely with other Rakuten companies.
Rakuten USA, headquartered in Boston, is the United States operating division of Rakuten. Rakuten companies provide a variety of consumer and business-focused services including eReading (Kobo), e-commerce (Rakuten.com, formerly buy.com, and Ebates), instant messaging (Viber), and others in the US, Canada and around the world. Since 2012, Rakuten (http://global.rakuten.com) has been ranked among the world’s “Top 20 Most Innovative Companies” in Forbes magazine’s annual list.
As part of the Rakuten family, OverDrive will take advantage of the global reach, scale and technologies throughout Rakuten’s portfolio. Once the transaction closes, OverDrive will operate as a subsidiary of Rakuten USA, and continue to be led by CEO Steve Potash, with its headquarters in Cleveland, Ohio. Kobo, headquartered in Toronto, Canada, and OverDrive will work together to enhance their abilities to deliver world-class digital content and reading technology services.
From the Rakuten Announcement:
“OverDrive is a widely-respected pioneer in digital content and the sharing economy. Long before even Kobo emerged onto the global stage, OverDrive had already seen the future and was working with publishers to digitize their content to share with the world, building one of the most comprehensive online digital marketplaces in the process,” commented Takahito Aiki, Head of Rakuten’s global eBook business. “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 contents businesses.”
As Rakuten expands its global internet services ecosystem, digital content represents one of Rakuten’s three key strategic pillars, alongside e-commerce and finance. Since first acquiring eReading company Kobo in 2012, 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. The acquisition of OverDrive adds a digital distribution platform, more than 2.5 million titles, and relationships with 5,000 publishers and 30,000 libraries that will strengthen Rakuten’s eBook and digital contents businesses globally. OverDrive achieved EBITDA of US$25 million in FY2014. With the addition of OverDrive, Rakuten expects the EBITDA of its global eBook business will be close to breakeven in 2015.
Full Text of Letter by Steve Potash, OverDrive CEO
OverDrive announced today that Rakuten, Inc. has agreed to acquire OverDrive from Insight Venture Partners, our private equity partner and majority owner since 2010. In a few weeks after the sale is complete, we will be part Rakuten USA, the US operating division of Rakuten, Inc. As you are an important partner of OverDrive, I am excited to share this news and describe what this will mean for you and your readers. Our announcement and FAQs can be found here.
OverDrive has grown significantly in the past decade due to our drive to constantly improve our service and deliver proven value for our library partners. Over the past four years we drew upon resources from Insight Venture Partners and its global portfolio of 90 technology-based companies. I am very excited about the new technologies, content, and innovations we expect to bring to our library partners and your readers as a result of this transaction. Rakuten is one of the world’s leading Internet services companies. Its business interests include eReading (Kobo), e-commerce (Rakuten.com, formerly buy.com and EBATES), instant messaging (Viber), and other B2C and B2B businesses in the US, Canada, and around the world. Since 2012, Rakuten has been ranked among the world’s ‘Top 20 Most Innovative Companies’ in Forbes magazine’s annual list.
This change in ownership will not affect our commitment to connect your readers with books and libraries by supporting all popular devices and apps. We remain committed to continue advancement of open industry standards, deep library integration, and other industry best practices. We will remain strongly aligned with your mission to uphold reader privacy, library branding and control of lending policies, and local curation of your digital collections. OverDrive will continue to be a strong advocate for library and school access to the best collections of digital materials with library-friendly terms and new and more flexible access models from publishers.
I will be meeting with library and school directors, management, and staff over the coming weeks and months to further outline our roadmap for 2015 and beyond. As proud members of ALA, we are in close communication with ALA leadership and the technology and information policy and advocacy units. While competitors or others may speculate what this news may bring, we will continue as before to work hard and provide the best selection, service, device compatibility, with measurable benefits for your communities.
We are preparing to work closely with Kobo (headquartered in Toronto) to add eBooks from their vast supply network of international publishers and content providers. To better serve our Canadian library and school partners, I am also pleased to announce we are preparing to open OverDrive Canada offices in Toronto in the coming months.
I am very proud of the relationships we have developed with many of you, the world’s greatest librarians, educators, and public servants. I look forward to making 2015 another record year of enabling service to your communities with increased efficiencies and respect for your resources. My team and I welcome a chance to answer any questions you may have. If we don’t connect before the summer, please plan to schedule a meeting with me and Team OverDrive at the ALA Annual Conference in San Francisco, or consider joining us and hundreds of librarians, educators and publishers this summer in Cleveland for Digipalooza 2015 . Thank you for your partnership and for the trust you have placed in us.
Steve Potash, CEO
- OverDrive will retain its brand name.
- Steve Potash will remain CEO of OverDrive.
- OverDrive will operate as part of Rakuten’s global network and work closely with other Rakuten companies toward similar goals, including Kobo to expand their retail eBook business.
- OverDrive will continue its focus on the core business of serving libraries and schools and providing trusted outlets for our publishers and content suppliers, here in the US and worldwide.
Thanks to Matt R. Weaver for his help with this post.
About Gary Price
Gary Price (firstname.lastname@example.org) is a librarian, writer, consultant, and frequent conference speaker based in the Washington D.C. metro area. He earned his MLIS degree from Wayne State University in Detroit. Price has won several awards including the SLA Innovations in Technology Award and Alumnus of the Year from the Wayne St. University Library and Information Science Program. From 2006-2009 he was Director of Online Information Services at Ask.com.