Naver announces deal to combine messaging app provider with Yahoo Japan

By Lim Chang-won Posted : November 18, 2019, 14:02 Updated : November 18, 2019, 14:02

[Courtesy of Naver]

SEOUL -- South Korea's top internet portal, Naver, announced a merger between its Japanese messaging app provider, Line, and Yahoo Japan, an internet portal in Japan, saying it would become a new artificial intelligence-based tech firm capable of competing with global platform operators such as Google in the Asian market.

Naver said in a regulatory filing on Monday that Line would become a joint venture to be equally shared by Naver and Japanese telecom giant SoftBank Group. The joint venture would control Z Holdings, the operator of Yahoo Japan. After a basic agreement, the two sides are to sign a formal contract next month.

Line, the most popular chat app in Japan with 80 million users, is a freeware app for instant communications on electronic devices and provides various services including digital wallet, video on demand and digital comic distribution. Yahoo Japan is the most visited website in Japan with 50 million users.

After the merger, Naver and SoftBank will create synergy in areas such as e-commerce and simple payment based on each company's messenger service, portal service, and others, as they intend to enhance cooperation in AI for competition against global platform operators such as Google and Facebook in Japan and Southeast Asia.

"We judged that decided that the integration of management will accelerate growth in fintech and increase the possibility of entering new business areas," Naver said.

The two companies will launch an open purchase to acquire all of Line's shares. If they fail to acquire all of Line shares, they would use a stock combination to turn Line into a company wholly owned by Naver and SoftBank before delisting it.

After the adjustment of shares between Naver and SoftBank, Line will become a SoftBank consolidated company, and the entire business carried out by Line will be transferred to Z Holdings. Naver said that the merged entity would secure the largest user base in Japan and Asia, controlling an instant messenger platform, a portal, an e-commerce platform and a financial service Japan under its wing.
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