SofBank Group Corp.’s telecom arm, which on Monday completed the merger of its Japanese internet business with messaging service owner Line Corp., plans to combine the payment apps of those two entities.
The company will fold Line Pay into PayPay, backed by SoftBank Corp., its Yahoo Japan unit and India’s Paytm, in April 2022 provided it secures all the relevant regulatory approvals, according to a joint statement from the two payment operators. SoftBank had kept mum on the possibility of a payments merger, saying only it aimed to extract synergies from the overlapping businesses.
Under a complex transaction that takes effect on Monday, SoftBank Corp. and Line’s parent Naver Corp. each own half of a newly created A Holdings Corp. That company in turn controls 65.3% of publicly traded Z Holdings Corp., taking SoftBank’s Yahoo Japan and Line’s operations under its umbrella. The deal was targeted for completion by October but got delayed by pandemic-induced market disruptions. It’s also come under attack from overseas hedge funds that said the tender offer price was too low.
The name is designed to symbolize everything as in “from A to Z,” reminiscent of Amazon.com Inc.’s motto, SoftBank has said. The letters also signify its focus on artificial intelligence and plans to expand in Asia.
PayPay had 36 million users in Japan as of the end of February, while Line Pay had about 39 million. The merger gives PayPay access to over 80 million Japanese users on Line’s messaging service. The former rivals are already combining their respective businesses and Line Pay users will be able to make payments at PayPay locations where QR codes payments are accepted starting second half of April.
Masayoshi Son, the SoftBank founder who backs some of the world’s largest startups, engineered the deal to create a Japanese tech champion that can compete with global rivals like Google, Amazon and Tencent Holdings Ltd. The combined company aims to spend 100 billion yen ($939 million) annually on development of AI-powered products.
News Source: Bloomberg