Yahoo Japan to combine with Line chat app: Report

The SoftBank-backed Yahoo and South Korea's Naver-owned Line would become the dominant mobile payment service provider in Japan if the deal pulls through.

SoftBank is planning to consolidate Yahoo Japan with messaging app provider Line, according to Nikkei

The Japanese telecom giant, which owns 45% of Yahoo Japan's parent company Z Holdings, and South Korean internet company Naver, which owns 73% of Line, are in the final stages of negotiations for a merger. The two companies are aiming to reach a basic agreement by the end of the month, the media reports. 

One proposal is for SoftBank and Naver to form a new 50-50 venture that would become the top shareholder of Z Holdings. Yahoo Japan and Line would then become separate wholly-owned subsidiaries of Z Holdings.

Z Holdings will remain listed on the Tokyo Stock Exchange.

Tokyo-based Line is the most popular chat app in Japan and the second most popular one in South Korea.

Z Holdings hopes to bolster services like mobile payments, e-commerce, and a news-search engine through the deal, Nikkei said.

The plan would be similar to that of chat app services like Tencent of China with WeChat and Kakao of South Korea with Kakao Talk that have integrated payment services, social media, and e-commerce to their platforms. The combined entity would boast a user base totalling 100 million people and become the dominant mobile payment service provider in Japan, Nikkei said.

"Line is reviewing various ways to increase the value of the company," a Line spokesperson told ZDNet. "What has been reported is among one of them but nothing has been decided yet."

SoftBank is in need of big win. It saw its net earnings for the first half tank off the back of a cut in the valuations of its investments in WeWork and Uber.

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