SoftBank’s Z Holdings confirms merger talks with Line

SoftBank’s Z Holdings confirms merger talks with Line

TOKYO (Reuters) – The Softbank-owned operator of search engine Yahoo Japan is in talks to merge with messaging app firm Line, a union that would create a group extending from retail to mobile payments in one of the biggest Japanese tech deals of the year.

FILE PHOTO: The logo of Line Corp is seen at the company’s headquarters in Tokyo, Japan, January 25, 2017. REUTERS/Toru Hanai

Z Holdings (4689.T), which last month changed its corporate name from Yahoo Japan, said on Thursday discussions were underway with Line Corp (3938.T) but nothing had been decided. SoftBank Corp (9434.T), which owns 44% of Z Holdings, also acknowledged the talks.

Sources told Reuters the previous day a deal could see SoftBank Corp and Line’s parent Naver Corp (035420.KS) form a 50/50 venture that would control Z Holdings, which would in turn operate Line and Yahoo.

The parties were likely to reach a basic agreement by the end of the month, the sources said.

The Nikkei business daily said Z Holdings would remain listed on the Tokyo Stock Exchange.

Z Holdings has a stock market value of about $17 billion and Line about $10 billion, according to Refinitiv data.

Line said in a statement it was true it is considering ways to improve its corporate value but nothing had been decided as reported in the media.

Line, which last year sold a majority stake in its mobile unit to SoftBank, has reported three consecutive quarters of operating losses as the company tries to jump-start growth.

Z Holdings made a move in September to take control of fashion e-tailer Zozo Inc (3092.T) in a $3.7 billion deal, as it bulks up against rivals such as (AMZN.O).

Dealmaking by SoftBank Corp, controlled by tech conglomerate SoftBank Group Corp (9984.T), comes despite the weak performance of the technology bets of its parent, which recorded an $8.9 billion operating loss in the second quarter.

The group’s first quarterly loss in 14 years followed a collapse in the value of its investment in office-sharing firm WeWork as investors have turned sceptical about the path to profitability at cash-burning startups.

Reporting by Chris Gallagher, Noriyuki Hirata, Sam Nussey; Editing by Chris Reese and Lincoln Feast.

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