Japan’s Z Holdings Corp (ZHD), a unit of Softbank Group Corp’s telecom arm formerly known as Yahoo Japan, is to merge with mobile chat app operator Line Corp, the firms said yesterday, in a bid to boost the customer base for their digital services.
Mobile operator Softbank Corp, the parent of Z Holdings, and South Korea’s Naver Corp, Line’s parent company, agreed the merger of ZHD and Line, Softbank and Naver said in a joint statement.
Line would be delisted after Softbank and Naver make a tender offer, with the merger expected to happen in October next year.
The decision “aims to bring together the business resources of the ZHD Group and the Line Group, which have overwhelming user bases and abundant assets in Japan, to provide a convenient experience to users in Japan,” the statement said.
Softbank also plans to invest in expanding into new business areas and “aims to be a leading company that is a driving force across Japan, Asia and worldwide,” it said.
The merger “will be conducted on an equal basis by ZHD and Line with the aim of forming a business group that can overcome fierce domestic and global competition,” and the newly integrated company would implement “business investment targeting growth in the areas of AI [artificial intelligence], commerce, fintech, advertising,” among others, it said.
The companies have been in talks about a possible alliance since June and settled on the idea of a merger in August, the statement said.
The final price for the tender offer is still under discussion.
Softbank and Line have increasingly competed in fields such as digital payments, and an alliance might allow them to save money on expenses such as subsidies.
Both companies have also been investing in AI to improve their services.
While the announcement did not say how the mobile payment rivalry would be resolved, it said the resulting company aims to spend ¥100 billion (US$918 million) annually on developing AI-powered products.
“Big data is key for the future of both companies,” said Koji Hirai, the head of mergers and acquisitions advisory firm Kachitas Corp. “The merger will enable them to create a massive repository of client data.”
Line and Yahoo Japan are betting they can leverage local knowledge to stay in the race in their home country and markets where their services are popular, including Taiwan, South Korea, Thailand and Indonesia.
Shares in Softbank Corp yesterday fell 0.33 percent to close at ¥1,503, while its parent Softbank Group rose 1.64 percent to ¥4,330.
ZHD shares rose 1.2 percent to ¥422 and Line gained 2.18 percent to close at ¥5,150.
Additional reporting by Bloomberg
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