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SoftBank inks $30bn merger with Yahoo Japan and Line Corp

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SoftBank Corp has announced plans to merge Yahoo Japan with Line Corp, a messaging app provider, to create a $30 billion tech company.

The news comes as SoftBank hopes to better compete with rivals like Rakuten and the major US tech players like Google and Amazon.

Speaking exclusively to Capacity, Paolo Pescatore, tech, media & telco analyst at PP Foresight, said that the new was “significant for both the local Asian and global markets. It now stands a better chance of success against the leading Asian and American web providers".

Through the merger SoftBank will gain access to Line Corp’s 164 million users and their data in Japan and South East Asia, also allowing it to expand into new areas business outside of its core wireless activities. In return, Line gains access to additional funding from SoftBank as well as its technical expertise.

This deal is “all about scale and complements each other’s assets,” continued Pescatore. “In this new world, companies need to compete in a smarter way against rivals and tap into new revenue opportunities. It will provide a wealth of data and stronger position to negotiate with partners such as advertisers.

A memorandum of understanding was signed by the parties - SoftBank Corp, Yahoo Japan (now Z Holdings Corp), Line Corp and Naver Corp, which owns Line - on 18 November 2019, with definitive agreements scheduled to be finalised in December 2019. The share agreement is due to be signed in January 2020 and a completion date has been set for October 2020.

After said merger has gone through, SoftBank Corp and Naver will launch a tender for Line’s remaining shares at 5,200 yen per share, which currently sits at a premium of 13.4% after the news of the merger was announced. In turn, valuing Line at approximately $12 billion.

Additionally, Line’s shares were up 2.2% at 5,150 yen after the news broke, wile Z Holdings rose by 1.2%, Naver’s up by 2.9% and SoftBank’s down by 0.3%.

Looking ahead SoftBank has confirmed that it will collaborate with Naver, Z holdings and Line in the areas of AI, internet searches, telecoms, advertisement, payment settlement and communications to name a few. According to Pescatore it will “undoubtedly lead to further corporate activity to keep up with this new merged entity".