Play.com snapped up by Rakuten for just £25m

The Channel Isles-based Play.com has been snapped up by Japanese e-commerce company Rakuten in a surprise deal worth £25m.

This marks the Japanese group's third online retail acquisition in Europe after the acquisition of PriceMinister in France and Tradoria in Germany. Privately-held Play.com has estimated annual revenues of £500m.

Hiroshi Mikitani, the chairman and chief executive of Rakuten, said: "The UK market is one of Europe's largest and most mature e-commerce markets. Play.com is not only a pioneer in the market, but also one of the UK's most successful e-commerce businesses." He added that the company intends to expand Play.com's operations worldwide.

Play.com was set up in 1998 by friends Richard Goulding, Simon Perrée and Peter de Bourcier who lived in Jersey and could mail DVDs and CDs from the Channel Isles VAT-free. It has 14 million registered users and 500 staff.

In April, the group kicked off the search for an investor, saying it planned an "aggressive" expansion drive across Europe. This came after the group was left red-faced as customer details were leaked.