The merger of Naver’s Line and SoftBank’s Z Holdings, formerly known as Yahoo! Japan, to create a $30 billion tech company will take the popular messaging app private first, making Line creator Shin Jung-ho a millionaire.
To carry out the merger, Line and Z Holdings will buy back 23.5 percent stake worth 173.6 billion yen (US$1.59 billion) from shareholders including Line Co-CEO Shin Jung-ho and Naver founder and Global Investment Officer Lee Hae-jin.
Line’s major shareholders as of June 30, 2019
Line, Yahoo Japan merge to beat off global tech rivals, aging society
Naver, SoftBank announce merger of Line, Yahoo Japan
The company said it is offering 5,200 yen (US$47.96) for each share. The value is a 13.41 percent premium of the closing price of Line’s common shares on Nov. 13, the last closing price before the reports of the merger before news came out. Line went public on July 15, 2016, with an IPO share price of 3,300 yen.
Shin is the largest individual shareholder of Line holding 1.98 percent or 4.76 million shares. With the tender offer, he is expected to cash in about 24 billion yen. As the creator of Line messenger app, the former computer engineer had received more than 10 million shares as stock options in 2012 and 2015. He is also reportedly expected to receive additional 4 million shares as stock options.
Shin, who took charge of Naver’s business in Japan in 2008 and launched Line messenger in 2011, will be the chief product officer of the new company, having a critical say in decision making of the integrated company.
Naver Founder and Global Investment Officer Lee Hae-jin owns 1.91 percent.
Z Holdings CEO Kentaro Kawabe (left) and Line President Takeshi Idezawa shake hands during a news conference in Tokyo on Nov. 18.
Line’s second-largest shareholder Moxley & Co., which holds 3.65 percent, will pocket 45.7 billion yen. The third-largest shareholder, Japan Trustee Services Bank, will sell 2.11 percent stake in Line worth 26.4 billion yen.
In case the joint tender offer fails to acquire all of the shares necessary to take Line private, Naver and SoftBank intend to effect a minority squeeze-out through a reverse share demerger, the messenger operator said in a statement.
Meanwhile, market watchers anticipate the merger to increase Naver’s corporate value.
Jung Yun-ho, an analyst at Korea Investment and Securities, on Nov. 20 said that “Naver would see its stock value increase up to 4 trillion won ($3.4 billion) through this business integration.”
“The two companies have been engaged in competition to acquire users since Japan’s mobile payment began taking off in earnest last year. By uniting, they could lower their marketing costs.”
He predicted more synergies will be created in the long run in business areas such as online-to-offline, fintech, advertisement and contents.
By Park Ga-young (email@example.com)