Rakuten acquires Play.com for £25 million

Rakuten of Japan recently announced it will buy Jersey-based Play.com. The music and film retail website was sold to Rakuten for £25 million, as the company continues to expand into Europe.

Play.com was started by three entrepreneurs who sold CDs and DVDs from The Channel Islands to consumers on the U.K. mainland to take advantage of the European value added tax rules that exempt transactions of less than £18 from sales tax, the Guardian reported.

The company offered lower prices than bricks-and-mortar retailers, which helped Play.com become the U.K.'s largest seller of DVDs online with estimated annual sales of £500 million. The VAT loophole that Play.com has prospered from is expected to be eliminated completely by the end of the year, but this did not deter Rakuten's purchase.

According to Reuters, Rakuten is looking to expand due to the Japanese market's shrinking population and weak consumer spending. By acquiring companies in European markets and offering a wider array of products and services to consumers, Rakuten hopes to compete with online giants such as Amazon and eBay.