SoftBank to cre­ate Ja­pan In­ter­net gi­ant to bat­tle global ri­vals

Muscat Daily - - BUSINESS -

Tokyo, Ja­pan - Masayoshi Son, af­ter back­ing star­tups around the world, is en­gi­neer­ing a com­plex deal on his home turf to cre­ate a na­tional cham­pion that can more ef­fec­tively com­pete with global ri­vals like Google and Ama­zon.com Inc.

Son’s SoftBank Group Corp plans to com­bine its Ya­hoo Ja­pan In­ter­net business with Line Corp in a deal that val­ues the coun­try’s lead­ing mes­sag­ing ser­vice at US$11.5bn. SoftBank and South Korea’s Naver Corp will take Line pri­vate and then fold Line and Ya­hoo Ja­pan into a new joint ven­ture. The deal re­quires share­holder ap­provals and is sched­uled to close by Oc­to­ber 2020.

The two com­pa­nies said the com­bi­na­tion is driven by a sense of cri­sis that global gi­ants are in­creas­ing their grip on the tech­nol­ogy in­dus­try and coun­tries like Ja­pan risk fall­ing be­hind. To­gether, Line and Ya­hoo Ja­pan, which now op­er­ates as Z Hold­ings Corp, will be able to share en­gi­neer­ing re­sources, ac­cess broader sets of data and in­vest more in ar­eas like ar­ti­fi­cial in­tel­li­gence (AI), the CEOs said.

“The In­ter­net in­dus­try of­ten op­er­ates on the win­ner-takes-all prin­ci­ple and the strong only get stronger,” said Line co-CEO Takeshi Idezawa. “Even com­bined, our mar­ket cap­i­tal, business scale and R&D ex­pen­di­tures are dwarfed by the global tech gi­ants.”

The chiefs said they need to join forces to mount a se­ri­ous chal­lenge to much larger ri­vals from the US and China.

“We want to be­come an AI tech com­pany that leads the world from Ja­pan,” said Ken­taro Kawabe, CEO of Z Hold­ings.

Un­der the pro­posed trans­ac­tion, Z Hold­ings and Naver will buy out Line’s pub­lic share­hold­ers in a ten­der of­fer at a pro­jected 5,200 yen per share, a 13 per cent pre­mium to Line’s share price be­fore news of the talks. Each com­pany plans to spend US$1.56bn on the bid. Naver al­ready owns 73 per cent of Line, while SoftBank Corp, the do­mes­tic tele­com arm of Son’s business em­pire, holds a roughly 44 per cent stake in Z Hold­ings.

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