Yahoo Japan, messaging app provider Line to merge by October 2020

Yahoo Japan Corp. and messaging app provider Line Corp. will merge by October next year, according to a SoftBank Corp. group firm on Monday, with the new venture set to create Japan's largest online firm to rival e-commerce giants like Rakuten Inc. and Amazon.com Inc.

The parent companies of both firms, Japan's SoftBank and South Korea's Naver, said that a fifty-fifty joint venture will be set up to take control of Z Holdings Corp., which operates Yahoo Japan.

Z Holdings, thereafter, will operate Yahoo Japan and Line as subsidiaries -- with Line being a wholly owned subsidiary -- and coming under the wing of internet behemoth and investment juggernaut SoftBank Group.

With the expected sales of Yahoo Japan and Line set to top e-commerce giant Rakuten Inc., Z Holdings Corp.'s president said the merger will create the strongest amalgamation in the industry.

"We will become the strongest 'one team' in the internet industry," Kentaro Kawabe, who will become co-CEO with Line's Takeshi Idezawa, told a press conference on the matter.

He said that Line's newer smartphone users and Yahoo's older users as a joint future base to target Internet services to, would work hand in hand.

"Line has successfully attracted many young smartphone users. But Yahoo Japan has many older users, because we started our business more than 20 years ago. The user bases of our two companies complement each other," Kawabe said.

Idezawa, for his part, said that there was an urgent need to compete with global IT giants.

"I have a sense of crisis because of the need to compete with global IT giants," Idezawa said Monday

"Even with the merger, there is still a huge gap between us and them, in terms of profits, market value, R&D... everything," said Idezawa.

In Japan alone, 82 million people use Line, while 50 million use Yahoo Japan's search engine and news services.

Along with a range of new Internet-based products, the joint venture will offer further social networking options, financial services and more e-commerce solutions.