Japanese operator Softbank and Korean internet group Naver have reached an agreement to merge their subsidiaries Yahoo Japan and messaging app Line. The deal is expected to create a new mobile and internet services giant to compete against international companies in the Japanese market. 

The deal will take the form of a takeover offer by Naver and Softbank to take Line private and then merge it with Softbank’s Z Holdings, which groups Yahoo Japan. Naver and Softbank will then each hold 50 percent in the merged group. They expect to sign a definitive agreement in December and complete the share exchange by next October, pending shareholder and regulatory approval. 

The merger brings together Yahoo Japan’s 140 million active users with Line’s 82 million users in Japan and 104 million abroad. In addition to Yahoo’s content and e-commerce properties and Line’s messaging platform, both companies have been growing in payment services. They also see room for growth in advertising, exploiting the data accumulated from users, and significant synergies from joint marketing and development. 


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