Naver, SoftBank to form a joint venture from next month

Lee Hae-jin, the founder of South Korea’s biggest portal site Naver, and Masayoshi Son, CEO of SoftBank, are officially joining forces to claim the hegemony of global ICT industry currently dominated by America and China. On Monday, the two companies made an announcement that Line and Yahoo Japan, the subsidiaries of Naver and SoftBank respectively, reached a merger agreement, which will start in earnest next month. The merger of the two giants from Korea and Japan will likely give birth to a global platform with more than 100 million users as a counterweight to Google and Alibaba Group.

The two companies from Korea and Japan signed a basic agreement to establish a joint venture with a 50-50 ownership and make it a shareholder of Z Holdings, the holdings company of Line and Yahoo Japan. Under the scheme, SoftBank and Naver will launch a tender offer for Line, and Line’s shares are all listed, with a separate operator of Line set up under Z Holdings.

The personnel choice for the representative of the JV and board of directors is designed to prevent potential management disputes in the future. “The heads of Line and Yahoo Japan are named as joint representative of the joint venture, and the board of directors will also be composed in the same ratio,” said an official from Naver. “The main contract will be signed in December, and we will make further progress in earnest to finalize the deal by October next year.”

“It will be the biggest scale of collaboration in Asia, combining Naver’s prowess in mobile platforms and strong content including its webtoon service with SoftBank’s dominance in e-commerce market,” said an ICT professional. In particular, online shopping and quick mobile payments are considered the field for robust cooperation between the two partners.

Market expectations are high as well. “The joint venture will turn out to be a Japanese Internet giant with a market capitalization valuated at around 30 trillion won,” said Lee Chang-young, a researcher at Yuanta Securities Korea. “The scope of business will also expand into the South East Asian region. Lee Jae-woong, the CEO of SoCar, a South Korean ride-sharing company, eval‎uated the merger as the most meaningful case of economic cooperation between Korea and Japan in a decade.


Jae-Hyeng Kim monami@donga.com