SoftBank Corp confirmed local reports stating it was in talks about a possible merger between its subsidiary Z Holdings, formerly Yahoo Japan, and mobile messaging platform operator Line.
In a statement issued today (14 November), the Japanese mobile operator said while talks were ongoing, no decision had been made.
Atul Goyal, equity analyst at Jefferies, commented in a research note a merger would benefit both companies, as the consolidation of Line (with 80 million active users) and Z Holding (50 million) would give them strong negotiating power with advertisers, and likely allow cross-selling opportunities.
While there is fair bit of overlap, he noted the target market and demographic profile of the two companies is quite different.
On the digital payment side, Goyal believes Softbank’s PayPay is extremely well positioned, so a merger would allow both companies to “stop bleeding, which will be particularly good for Line” and its parent Naver.
Goyal added that a combined entity would have access to more data, allowing it to better target users for sales and strengthening its competitive position against Rakuten.
With Rakuten in the process of becoming a full mobile operator in Japan, SoftBank is expanding into retail, announcing recently Z Holdings will acquire online fashion retailer Zozo.