Yahoo Japan, Line synergy via merger

The planned merger between Yahoo Japan and messaging app Line is a strategic move by a multinational conglomerate holding company to explore business synergy with a super app seeking opportunities, says Pisut Ngamvijitvong, a senior analyst at Kasikorn Securities (KS).

SoftBank Group of Japan announced on Monday an agreement to merge its Yahoo Japan subsidiary with Line, whose majority stake is held by Naver, a South Korean company. The merger is slated for October next year.

Mr Pisut said Softbank has many subsidiaries, including Sprint Corporation, the fourth largest mobile network operator in the US, and Japan’s mobile payment app operated by PayPay Corporation.

Line is a super app company that holds stakes in ride-hailing giants Uber and Grab.

“The deal is seen as a combination between big players in digital-related business where the global economic situation makes it easy for funding,” he said.

Mr Pisut said it is normal amid the digital transformation trend to see businesses work together to seek greater opportunities.

Under the deal, Softbank Corp, the mobile unit of SoftBank Group, and Naver will each hold a 50% stake in a new company that will hold a 65% stake in Z Holdings, under which

Yahoo Japan and Line will operate.

Line has 185 million active users in Japan, Taiwan and Asean, while 67 million people visit Yahoo Japan’s website each month.

The combined revenue of Yahoo Japan and Line would total ¥1.16 trillion (322 billion baht), surpassing the ¥1.10 billion of leading Japanese e-commerce giant Rakuten Inc.

SoftBank Group recently reported a group operating loss of ¥704 billion between July and September, hindered by its investment in WeWork, the embattled office space company.

Line has reportedly struggled to expand its customer base.

The company plunged into the red last year and has continued to post losses.