SoftBank Negotiates with Naver to Acquire Stake in Japan's Line Yahoo

Japan's SoftBank is reportedly pushing negotiations to purchase shares of the intermediate holding company of Line Yahoo, the operator of the Line application, from Naver.

On the 23rd, Kyodo News reported that SoftBank is conducting such negotiations.

Takeshi Idezawa, President of LINE Yahoo
Photo by Yonhap News

Line Yahoo shares are approximately 65% owned by A Holdings, a joint venture established by Naver and SoftBank. SoftBank and Naver each own 50% of A Holdings, which serves as the intermediate holding company of Line Yahoo. If SoftBank purchases A Holdings shares from Naver and increases its investment ratio, it could gain management control.

Kyodo News explained that amid two administrative guidance actions issued by Japan's Ministry of Internal Affairs and Communications to Line Yahoo over personal information leakage issues, SoftBank intends to review capital relations to reduce Naver's influence and respond to the ministry's administrative guidance.

However, according to the news agency, Naver reportedly showed reluctance due to concerns over a decline in its influence over Line Yahoo. The agency stated, "SoftBank aims to expedite discussions using the financial results announcement on the 9th of next month as a turning point, but whether progress will be made remains uncertain."

Earlier, the Ministry of Internal Affairs and Communications announced that it would issue a second administrative guidance to Line Yahoo, which had received the first guidance last month due to a large-scale personal information leak incident, citing insufficient cybersecurity measures. The second guidance urges a review of capital relations with Naver and instructs the submission of reinforced measures by July 1.

Line is the most widely used messenger app in Japan. In November last year, Line Yahoo disclosed that its servers were attacked by a third party, potentially leaking information of 440,000 Line users and others. Subsequent investigations confirmed that a total of approximately 510,000 pieces of information were leaked as of February this year.