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Softbank to create $30bn tech giant with new merger

By Yana Berman

Softbank's internet unit confirms Yahoo Japan and Line messenger deal

Japanese financial conglomerate Softbank has revealed that its internet unit Yahoo Japan, will merge with messaging app operator Line Corp, forming a $30bn (£23.1, €27.1) worth rival to Japanese internet companies such as Rakuten.

Yahoo Japan, which changed its name to Z Holdings last month, will complete the deal with the South Korean messenger by October 2020.

In December, Softbank and Naver, which owns 73 per cent of Line Corp, will produce a definitive agreement and form a 50:50 venture Z Holdings to operate Yahoo Japan and Line.

The two companies are also eyeing to launch a tender offer for Line's shares at 5,200 yen (£23.1, €27.1) each, which represents a 13.4 per cent premium to the price before the announcement.

Following the news, Line's shares were up 2.6 per cent in early hours trading on Japanese markets. Last week, when the rumours on the merge first appeared, the stock of the money losing messenger jumped 16 per cent.

As political relations between Japan and South Korea have recently been challenging, the new deal might be their most significant economic cooperation of the last decade, South Korean entrepreneur Jaewoong Lee wrote on his Facebook account.

Earlier this year, a bankrupt working space provider WeWork accepted a $10bn (£7.7bn, €9bn) offer from SoftBank, who was its biggest investor. As the company abandoned its planned IPO after investors questioned its large losses, Softbank decided to lend a hand to one of the most troubled companies in its portfolio.

Later SoftBank Group recorded its first quarterly operating loss in 14 years, blaming the decrease in the fair values of investments including Uber and WeWork.

FURTHER READING: SoftBank records $6.5bn losses following bad investments

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