Japan’s SoftBank plans to merge internet business Yahoo Japan with messaging app Line to form a $30 billion tech behemoth, as it bags struggling internet corporations to pair up against competitors like Rakuten Inc.
The telco in a statement mentioned Yahoo Japan, which in October modified its name to Z Holdings, will merge with Line, held by South Korea’s Naver, in a contract to be concluded in October 2020.
The firms aim for a definitive agreement by next month in a transaction that will see SoftBank and Naver create a 50:50 venture that can control Z Holdings, which will, in turn, run Yahoo Japan and Line.
SoftBank and Naver, which owns 73% of money-losing Line, plan to launch a moderate offer for Line’s rest shares at 5,200 yen each, (a 13.4% premium to the shares’ price before news of the merger came out). Line’s stocks were up 2.6% at 5,180 yen in early trade Monday.
Line has been looking for growth by expansion into areas equivalent to QR code payments with Line Pay; however, has been squeezed because of its limited funds and heavy-spending peers along with SoftBank, which has a competitor service called PayPay.
The merger contract is the latest example of an alliance in Japan’s technology sector. SoftBank this month concluded its acquisition of online fashion retailer Zozo, whose founder and ex-CEO Yusaku Maezawa sold out his stake following a series of failures.
Coming at a time of elevated political tension between Japan and South Korea, the merger might be the two countries’ most important economic cooperation of the last decade, Jaewoong Lee, a South Korean entrepreneur and founder of Naver competitor Daum wrote in a Facebook post late on Sunday.