On Monday, Japan’s SoftBank Corp stated, it plans on merge Yahoo Japan with messaging app operator Line Corp in order to create a $30 billion tech giant, as it aims to group together struggling internet companies to bulk up against rivals such as Rakuten Inc.
In a statement SoftBank said Yahoo Japan, which last month changed its name to Z Holdings Corp, will merge with Line, which is owned by South Korea’s Naver Corp. The deal is scheduled to be completed by October 2020.
Naver and SoftBank are aiming for a definitive agreement by next month in a transaction that will see them both form a 50:50 venture that will control Z Holdings, which will in turn operate Yahoo Japan and Line.
SoftBank Corp and Naver, which owns 73% of money-losing Line, plan to launch a tender offer for Line’s remaining shares at 5,200 yen each, which represents a 13.4% premium to the shares’ price before news of the merger broke.
With the news reaching the market, Line’s shares rose by 2.6% to 5,180 yen in early Tokyo trade on Monday.
The merger is the latest example of consolidation in Japan’s technology industry and comes at a time when there is heightened political tension between Japan and South Korea, making the deal the most significant economic cooperation of the last decade.