The companies aim for a definitive agreement by next month in a transaction that will see SoftBank Corp and Naver form a 50:50 venture that will control Z Holdings, which will in turn operate Yahoo Japan and Line.
Mobile operator SoftBank Corp, the parent of Z Holdings (ZHD), and South Korea's Naver, Line's parent company, agreed the merger of ZHD and Line, SoftBank and Naver said in a joint statement. The two sides are scheduled to ink a formal contract next month, officials said.
Naver said the decision for the business integration will bring together the operators of two of Japan's biggest payment apps amid the "cashless" era. Line, Yahoo Japan portal, commerce platform Yahoo Shopping and Zozo, financial services provider Japan Net Bank will all become one family under Z Holdings.
SoftBank and Line have increasingly competed in fields such as digital payments, while both firms have also been investing in artificial intelligence to improve their services. The company posted 207.1 Japanese billion yen in sales in 2018.
The conclusion "aims to bring together the business enterprise methods of the ZHD Group and the LINE Team, which have overpowering user bases and plentiful belongings in Japan, to supply a hassle-free working experience to buyers in Japan", the assertion talked about.
If completed, the merged entity could become Japan's biggest internet platform with chat, search, e-commerce and payment apps with over 100 million users, surpassing e-commerce giant Rakuten Inc. The deal is expected to create a new mobile and internet services giant to compete against global companies in the Japanese market.
According to the press statement, the business venture aims to overcome "fierce domestic and global competition" by combining business resources, as well as implementing business investment targeting growth in the areas of advertising, AI, commerce, fintech, and O2O, as well as other new business areas.
In a keynote address at DEVIEW 2019, Korea's leading annual tech conference held previous year in southern Seoul, Seok Sang-ok, head of Naver Labs, said that the company plans to come up with aggressive investment plans to create new global scene led by Korea to compete with AI technology industry dominated by US and China.
Line will be delisted soon after SoftBank and Naver make a tender provide, with the merger expected to happen in Oct 2020. Line's shares were up 2.6 percent at $0.048 in early Tokyo trade on Monday. The announcement was made before the markets opened.