Yahoo Japan and Line are reportedly going to merge

According to Nikkei, messaging app Line and Yahoo Japan are about to merge and form a single tech company. Despite the name, Yahoo Japan is currently 100% owned by Z Holdings, a company that is controlled by Japanese telecom company SoftBank (Yahoo Japan isn’t related with TechCrunch’s parent company Verizon Media). Line Corporation is owned by Naver Corporation, a South Korean internet giant.

The two companies are still discussing terms of the deal according to Nikkei. But you could imagine Z Holdings becoming a 50-50 joint venture between SoftBank and Naver, with Z Holdings owning both Yahoo Japan and Line.

Line operates one of the most popular messaging apps in Japan. In addition to conversations, the company operates Line Pay, Line Taxi and other services. But competition has been fierce in the messaging space.

Yahoo Japan was originally formed by Yahoo and SoftBank in the late 1990s. When Verizon acquired Yahoo in 2017, Verizon didn’t acquire Yahoo’s stake in Alibaba and Yahoo Japan. Yahoo created a spin-out company called Altaba to hold those stakes.

Altaba first sold its stake in Yahoo Japan. In July 2018, SoftBank acquired part of Altaba’s stake in Yahoo Japan in order to increase its ownership of Yahoo Japan. Altaba later sold its remaining Yahoo Japan shares, its Alibaba shares and shut down. In 2019, SoftBank received additional shares to become Yahoo Japan’s parent company.

Yahoo Japan is a household name and a big internet conglomerate in Japan. It has an online advertising business, an e-commerce business, finance services and more. Yahoo Japan and Line probably hope to reach more users and boost engagement with the merger.

We’ve reached out to Line Corporation and Z Holdings and will update if we hear back.

Update: Z Holdings has sent me the following statement:

There were several media reports made by Nikkei and other media sources since last night regarding the merger of Z Holdings Corporation and LINE Corporation.

While it is true that the merger is being considered, no formal decisions have been made. If we make any decisions that need to be disclosed in the future, announcements thereof will be made promptly.

Line Corporation has sent me the following statement:

Since November 13th, 2019, the Nikkei and other media reported a merger between LINE Corporation and Z Holdings Corporation. This is not an official announcement by LINE Corporation. LINE Corporation continuously evaluates various opportunities to increase the corporate value including such merger, however, no decision has been made regarding the report.

Should there be facts that need to be disclosed, LINE Corporation will make appropriate disclosure.