Line Yahoo, Tangled Business and Shareholding Structure
"The More Complex the Relationships, the Harder It May Be to Get What You Want"
As it has been revealed that the shareholdings of Line Yahoo's subsidiaries are intricately intertwined, there are expectations that negotiations between Naver and Japan's SoftBank will be significantly delayed. The various scenarios to consider?from whether to sell the shares to how to divide them if sold?are likely to be further complicated by the Line Yahoo subsidiary shareholdings, impacting the prolongation of the negotiations.
According to industry sources and Naver's business reports on the 20th, Line Yahoo holds 100% stakes not only in the messenger service Line and the portal/search service Yahoo but also in Line Financial and Line Pay. Through the financial platform company Line Financial, Line Yahoo operates businesses in overseas regions such as Taiwan and Thailand, and through Line Pay, it conducts payment services at convenience stores, online shopping, remittances, and public utility bill payments.
Line Financial and Line Pay are separate entities. However, the research and development (R&D) company Line Pay Plus, which supports Line Pay's global expansion, is under the control of Line Financial. Line Biz Plus, responsible for planning, development, and design of global fintech (financial + technology) services, is wholly owned (100%) by Line Pay.
The companies responsible for global operations also exhibit different governance structures by country. In Thailand, Kasikorn LINE, established to provide mobile banking services, is controlled by Line Financial, but in the case of Line Pay Thailand, 51% of Line Man?known as the Thai version of Baedal Minjok?is owned by Line Man, while Line Pay and Line Thailand each hold 33.33% and 15.67%, respectively. Line Yahoo holds 41.45% of Line Man shares through the intermediate holding company Z Intermediate Global and Line Southeast Asia, exercising control. Similarly, through Z Intermediate Global, Line Plus, which oversees Line's overseas business, and Line Thailand are managed. Conversely, in Taiwan, Line Financial controls all three entities: Line Pay, Line Financial, and Line Bank Taiwan.
The complex relationships among Line Yahoo subsidiaries are likely to pose obstacles during share negotiations. In particular, if SoftBank, which holds management rights over Line Yahoo, raises its voice to retain global businesses citing difficulties in separating shares or businesses, it would be difficult for Naver to accept. Currently, even if Naver concedes Line Yahoo's Japanese business to SoftBank, there is a strong voice that global businesses such as those in Taiwan or Southeast Asia should be retained considering future growth.
Line Yahoo's pursuit of becoming a global comprehensive platform company by engaging in multiple businesses could also become a hurdle in negotiations. Given that it is nurturing subsidiaries in various sectors, it is expected that Line Yahoo will not easily hand over each sector to Naver. Line Yahoo's Z Intermediate Global holds a 70% stake in IPX (formerly Line Friends), which manages Line character intellectual property (IP) business, and 100% of Line Next, which oversees the Web3 business.
Z Intermediate Global operates virtual asset and blockchain businesses through Line Genesis and holds more than 36% and 35% stakes in Japan's top delivery application Demae-can and Line Games, respectively. The gourmet recommendation service Line Conomi (100%) and Line Music (60.04%) are also under Line Yahoo's influence.
Professor Lee Sung-yeop of Korea University's Graduate School of Technology Management stated, "It appears that Naver intended to expand IT-related businesses into global markets such as Southeast Asia through the base of Line Yahoo," adding, "If the relationships among companies under Line Yahoo's influence are complex and SoftBank is aiming for a global mega platform, it will become difficult to obtain what they want."
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