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Naver Corp., South Korea's No. 1 internet portal, said Monday that its Japanese messaging app provider Line Corp. has reached a basic merger deal with internet portal Yahoo Japan Corp., a move that could form Japan's largest internet platform.
Under the agreement, Line and Japanese telecom giant SoftBank Group Corp. ― a holding firm of Z Holdings Corp. that operates Yahoo Japan ― will each hold a 50 percent stake in a new joint venture named Z Holdings, the company said.
The two sides are scheduled to ink a formal contract next month.
Naver holds a 73 percent stake in Line, and SoftBank owns 45 percent of Yahoo's parent company Z Holdings.
Naver said the decision for the business integration will bring together the operators of two of Japan's biggest payment apps amid the "cashless" era.
Line is the most popular chat app in Japan with 80 million users, far ahead of global platforms, such as Instagram and Facebook, in Japan. The company posted 207.1 Japanese yen (1.9 billion) in sales in 2018.
Yahoo Japan, which has been making efforts to bolter services, such as mobile payments and e-commerce, has 50 million users and generated 954.7 billion yen of revenue last year.
If completed, the merged entity could become Japan's biggest internet platform with chat, search, e-commerce and payment apps with over 100 million users, surpassing e-commerce giant Rakuten Inc.
"(The deal) is expected to create synergy and increase future growth, bringing Z Holdings to the new tech firm based on artificial intelligence (AI) that could compete against global platform operators," Naver said in a press release.
Market watchers forecast the new JV to bolster developing AI technology, considered a new growth engine, in the face of Google Inc., Facebook and other global leaders.
Shares of Naver were trading hands 0.86 percent higher at 175,000 won on the Seoul bourse as of 10:53 a.m. The announcement was made before the local market opened. (Yonhap)
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