SoftBank stewards $30bn merger to create potential super app
Softbank’s Yahoo Japan search engine is to merge with messaging app Line.
In a press release, SoftBank said it and Line’s parent company Naver had entered into a “non-binding memorandum of understanding, dated November 18, 2019, and submitted a nonbinding letter of intent, to the board of directors of LINE with a proposal to take LINE private”. The mechanism by which this would occur is a joint offer from SoftBank and Naver for all outstanding stock, taking the company private an establishing a jointly owned holding company for Line and Yahoo Japan.
Yahoo Japan is the country’s biggest search engine, and a separate entity to the original American company from which it was founded. Line, meanwhile, is Japan’s most popular messaging app, formed in the necessity of easing communications after the 2011 earthquake.
The combination of a search engine and messaging app is perhaps unusual. Popular messaging apps tend to be tied to social networks, as with WhatsApp and Facebook, or WeChat, which combines both functions. Google’s foray into social networks / messaging was famously a flop.
Why SoftBank is loaning its employees $20bn for reinvestment
Fintech firm C2FO raises $200mn from SoftBank Vision Fund and others
The merger will certainly be a boon to Line’s openly expressed ‘super app’ ambitions, stating on its website its desire to become a “smart portal” to different services and information. Japan has yet to be affected by the predominantly asian phenomenon of the super app, meaning applications that combine a vast array of services, such as payments, delivery and personal transportation, into one product. Examples include China’s WeChat, Singapore’s Grab, and Indonesia’s Gojek.
Back in June, the company launched a set of plug-in “mini apps” allowing for activities from other apps to be performed inside of Line, a feature borrowed from WeChat and evidence of its ambition.
Subject to the usual approvals, the deal’s anticipated completion date is October 2020. SoftBank’s move comes after the debacle of WeWork’s failed IPO and bailout, with SoftBank CEO Masoyashi Son admitting he had made mistakes in the endeavour.