SoftBank considers acquiring LINE
On Wednesday, Japanese multinational holding, SoftBank, revealed the plan to acquire the instant messaging app, LINE. SoftBank is looking for an acquisition deal with LINE through its group firm, Z Holding, a firm that also runs Yahoo! Japan. LINE is the biggest instant messaging app in Japan, housing more than 80 million Japanese users. Its value on the Tokyo Stock Exchange is at about ¥1.1 trillion. Judging by the fact, SoftBank wants to fortify its stance on smartphone and internet-related services by a comprehensive partnership agreement.
Currently, LINE is owned by Naver, a South Korean (S. Korea) internet juggernaut. During January – September 2019 period, LINE booked a ¥39.9 billion group net loss due to its investment in technological development. All along, SoftBank and Yahoo! Japan tap into the search result and purchase history of its users as the source of their advertising business. To further grow, SoftBank decides to tap on LINE, whose ad distribution technology seems effective for the job.
The deal was not new for SoftBank and LINE. As a matter of fact, SoftBank holds a majority stake in LINE Mobile, at 51 percent. Z Holding itself is looking forward to merging Yahoo! Japan and LINE into one business, hoping to reach out and boost the engagement with more users stored by LINE. However, before LINE existed, Yahoo! Japan is already a big player in Japan. Yahoo! Japan was formed by Yahoo! and Softbank in the late 1990s. While Verizon acquired Yahoo! in 2017, it did not acquire stakes in Yahoo! Japan and Alibaba. Therefore, Yahoo! formed Altaba, a spin-out company, to hold those stakes. Altaba finally sold all of its remaining shares to SoftBank and shut itself down.
SoftBank later received all of the Yahoo! Japan’s shares and became its parent company. The upcoming deal between SoftBank and LINE will add another gambling investment made by SoftBank. For the three-month period that ended in September, SoftBank booked a ¥704.37 billion group operating loss, the worst since the foundation of the holding, due to the devaluation of one of its companies, a workspace arranger based in the United States (U.S), WeWork.