On Monday, SoftBank (OTCMKTS:SFTBY) announced that it had reached a merger agreement with Z Holdings (OTCMKTS:YAHOF), formerly known as Yahoo Japan and Line Corp (NYSE:LN). The move aims at creating an internet firm to take on the US and Chinese online giants.
Nave and SoftBank to hold 50% stake each in the new company
According to the terms of the agreement, the owner of Line, Nave, and SoftBank will hold 50% interest each in the new holding. The merger will help the companies in positioning Yahoo Japan as a search platform. It will also help boost Line’s messaging app as well as enhance other businesses to help in competing against the US and China.
In a statement, the companies indicated that currently, the US and China dominate the internet market. In comparison to the size of operation, there is vast difference between the companies and those from other Asian countries such as Japan except for China.
Line and Z Holdings combine to form an AI company
Line has a user base of around 82 million in Japan, and its messaging app is popular in other places like Taiwan and Thailand. However, despite offering a range of products Line has struggled to compete favorably in other markets. The company offers services such as Line Taxi, Line Pay as well as Line Music.
On the other hand, Yahoo Japan is the largest search engine in Japan, but it faces completion from the likes of Google. It also competes with e-commerce rivals such as Alibaba (NYSE:BABA) and Rakuten (OTCMKTS:RKUNF). Yahoo Japan boasts more than 50 million users.
The merger will, therefore, strengthen the positions of the companies to transform them into a leading tech company. Through the cooperation of the subsidiaries, the company will be able to make advances in AI as well as other areas such as advertising, search, and payment services.
Z Holdings CEO Kentaro Kawabe indicated that they are teaming to share a sense of crisis as well as huge ambitions. Kawabe stated that the two companies’ focus is to become the main AI-focused company in Japan.