Press Releases 2019
SoftBank Corp. (hereinafter “SoftBank”), NAVER Corporation (hereinafter “NAVER”, and SoftBank and NAVER are collectively referred to as the “Proposing Parties”), Z Holdings Corporation (Securities Code: 4689, listed on the first section of the Tokyo Stock Exchange, Inc. (hereinafter, the “TSE”)), a consolidated subsidiary of SoftBank (hereinafter “ZHD”), and LINE Corporation (Securities Code: 3938, listed on the first section of the TSE), a consolidated subsidiary of NAVER (hereinafter “LINE”), have, since November 18, 2019, been discussing and evaluating a business integration between ZHD and its subsidiaries (hereinafter, the “ZHD Group”) and LINE and its subsidiaries (hereinafter, the “LINE Group”) (hereinafter, the “Business Integration”) based on the Memorandum of Understanding regarding the Business Integration on an equal basis that was entered into between the four companies on November 18, 2019 (hereinafter, the “Integration MOU”), and in accordance with the resolutions of the Board of Directors of each of NAVER, ZHD and LINE at a meeting held today, and in accordance with the decision of Ken Miyauchi, Representative Director, President & CEO, who has been authorized in accordance with the resolution of the Board of Directors of SoftBank at a meeting held today, the four companies have today entered into a business integration agreement, which is the definitive and legally-binding agreement regarding the Business Integration (hereinafter, the “Definitive Integration Agreement”), and in accordance with the resolutions of the Board of Directors of NAVER at a meeting held today, and in accordance with the decision of Ken Miyauchi, Representative Director, President & CEO, who has been authorized in accordance with the resolution of the Board of Directors of SoftBank at a meeting held today, the Proposing Parties have entered into a legally-binding transaction agreement today regarding the Definitive Integration Agreement and joint venture agreement (hereinafter, the “Joint Venture Agreement”).
In addition, as announced by the Proposing Parties in the “Notice Concerning the Planned Commencement of the Joint Tender Offer for Shares of LINE Corporation (Securities Code: 3938)” dated today (hereinafter, the “Press Release for the Tender Offer”), as one step in the series of transactions to realize the Business Integration, by resolution of the Board of Directors of NAVER at a meeting held today, and by the decision of Ken Miyauchi, Representative Director, President & CEO, who has been authorized in accordance with the resolution of the Board of Directors of SoftBank at a meeting held today, the Proposing Parties have decided to jointly conduct a tender offer in Japan and the United States (hereinafter, the “Joint Tender Offer”).
According to the announcement from LINE today, “Announcement of Opinion Regarding the Planned Commencement of the Joint Tender Offer for the Shares of LINE Corporation by SoftBank Corp. and NAVER Corporation, the Controlling Shareholder of LINE Corporation,” it has been resolved by the Board of Directors of LINE at a meeting held today that in the event that the Joint Tender Offer commences, LINE will express its opinion in support of the Joint Tender Offer and, at the same time, recommend that holders of LINE common shares and American Depositary Receipts tender into the Joint Tender Offer for common shares of LINE (“LINE Shares”), and leave to the discretion of the owners of share options and convertible bonds the decision of whether or not to tender into the Joint Tender Offer.
ZHD, the publicly listed integrated company following the Business Integration (hereinafter, the “Combined Company”), is expected to be a consolidated subsidiary of SoftBank. The Business Integration is conditioned on the receipt of required competition law and foreign exchange law approvals and other clearances and permits required by applicable law and regulation.
1. Purpose and Significance of the Business Integration
Social and industrial conditions surrounding us are changing drastically and daily on a global basis. Particularly in the Internet market, overseas companies, especially those based in the United States and China, are overwhelmingly dominant, and even when comparing the size of operations, there is currently a big difference between such overseas companies and those in Japan and other Asian countries, other than China.
Furthermore, in Japan, which is working to increase the declining productivity that comes along with a shrinking workforce and to respond rapidly to natural disasters, the use of AI*1 and technology in these fields has great potential.
“AI” stands for “Artificial Intelligence.
In these circumstances, under SoftBank's “Beyond Carrier” strategy, through collaboration between SoftBank group companies and leading companies that they invest in, SoftBank goes beyond being a telecommunications carrier and aims to develop new businesses that use the world's most advanced technologies, including AI and IoT*2. At the same time, NAVER aims to transform and innovate the world's most advanced technologies in order to provide services going beyond being the biggest search portal engine in the Republic of Korea. The Business Integration aims to bring together the business resources of the ZHD Group, which provides various services in Japan and has a firm user base (averaging 67.43 million monthly users and 140 million MAU in total for apps) and abundant assets (total consolidated assets: 2,795,895 million yen), and the LINE Group, which has a rich range of services and a user base with 82 million monthly active users in Japan and 104 million monthly active users overseas, to provide a convenient experience to users in Japan and bring Japanese society and industry up-to-date through strengthening existing business areas and investing in expansion into new business areas. Through further expanding this innovative model globally, SoftBank aims to be a leading company that is a driving force across Japan, Asia, and worldwide. The Business Integration envisions business cooperation between SoftBank, NAVER, ZHD, and LINE in a variety of areas and industries, including among others, AI, internet searches, telecommunications, advertisement, payment settlement, communication, etc., and is positioned to be instrumental in increasing the corporate value of SoftBank and NAVER: in the case of SoftBank, by generating further growth at ZHD, a crucial component to SoftBank's “Beyond Carrier” strategy, and creating new business opportunities in the 5G era; and in the case of NAVER, by supporting its efforts to establish itself as a leading AI technology-based IT company and accelerating the growth of its Fintech*3 services using the most advanced technologies.
IoT stands for “Internet of Things,” and it refers to the communication between objects via the Internet.
Fintech is a word made up of “finance” and “technology,” and it refers to activities to attempt to resolve inefficiencies in existing financial services and to innovate financial services through the utilization of smart devices including smartphones and tablets and technologies that utilize big data.
(2) Basic Principles of the Business Integration
The Business Integration will be conducted on an equal basis by ZHD and LINE with the aim of forming a business group that can overcome fierce domestic and global competition through the ZHD Group and the LINE Group bringing together their business resources and through the Combined Company group, following the Business Integration, pursuing synergies in their respective business areas as well as implementing business investment targeting growth in the areas of AI, commerce, Fintech, advertising, and O2O*4 and other new business areas.
O2O stands for “Online to Offline,” and it refers to measures for online (internet)-based information to influence offline (real world) purchasing activities.
(3) Vision and Management Philosophy for the Combined Company
Through the Business Integration, the ZHD Group and the LINE Group will combine their business resources, and by crossing the ZHD Group slogan of “Make our users' lives convenient to a surprising (!) extent” and the “wow” value standard of the LINE Group, will create and offer a more abundant and convenient lifestyle for users by providing AI and Internet technology.
First, by bringing Japanese society and industry up-to-date by providing the best user experience in Japan, and expanding from there to Asia and then beyond globally, the aim is to become the “AI tech leader of the world from Japan/Asia”.