Report Submitted to Japan's Ministry of Internal Affairs and Communications
Negotiations Continue on A Holdings Share Sale
Naver CEO Choi Soo-yeon to Attend National Assembly
Expected to Address Related Issues
Line Yahoo stated that "short-term capital movement by the holding company A Holdings is difficult." While advancing the timeline for ending business consignment such as the separation of Naver and the system, they intend to continue discussions on reviewing the capital relationship. Accordingly, negotiations between Naver and SoftBank, each holding half of A Holdings' shares, are expected to be prolonged. Naver CEO Choi Soo-yeon plans to attend the National Assembly to explain issues related to Line Yahoo.
According to the IT industry on the 2nd, Line Yahoo explained in a report submitted to Japan's Ministry of Internal Affairs and Communications the previous day regarding the negotiation for selling A Holdings' shares that "SoftBank and Naver share the recognition that short-term capital movement is difficult" and "plan to continue efforts to advance discussions." This report is a response to the administrative guidance issued twice in March and April this year by the Ministry following the personal information leak incident of the messenger Line that occurred in November last year.
A Holdings is the parent company holding 65% of Line Yahoo's shares. Previously, Japan's Ministry of Internal Affairs and Communications demanded a review of the capital relationship from Line Yahoo, effectively pressuring Naver to sell its shares in A Holdings.
Line Yahoo mainly included in the report the intention to terminate the business consignment with Naver early. The consignment of Japanese services and businesses entrusted to Naver and Naver Cloud is planned to end by the end of December 2025.
The report also specified the termination timeline for collaboration on individual services. By the end of September 2024, integration related to the search engine on Yahoo Search will be discontinued, and by the end of December 2024, the consignment for developing image search functions on Yahoo Camera Search will end. Additionally, consignment for local services, commerce, advertising, entertainment services, and messenger will be terminated by the end of September 2025 at the latest.
For the tasks where consignment ends, Line Yahoo plans to internalize the technology or use third-party solutions. They also plan to end the consignment relationship with Naver regarding internal systems and development tools used by Line Yahoo employees.
The industry expects the negotiation for share sales between Naver and SoftBank to be prolonged. Although they are severing business ties with Naver, their stance on reviewing the capital relationship remains fundamental, and no deadline has been set for the sale negotiations.
Naver is keeping all possibilities open, including share sales, but negotiations are not simple. Line Yahoo serves as a forward base for Naver's overseas business, and shares are intricately intertwined with SoftBank in various businesses beyond Line. Even if a sale occurs, it is reported that there is a significant difference in price views between the two sides. Moreover, with voices coming from political circles in both countries and Naver executives and employees, there is speculation that negotiations may extend beyond this year.
Attention is focused on CEO Choi Soo-yeon's remarks. On the 2nd, CEO Choi will appear as a witness at the full meeting of the National Assembly's Science, Technology, Information and Broadcasting and Communications Committee (STIBC) to respond to inquiries about Line Yahoo issues. Previously, CEO Choi was requested to appear as a reference witness for STIBC's issue inquiry on the 25th of last month but did not attend due to overseas schedules and other reasons.
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