SoftBank Corp.'s group company controlling Yahoo Japan Corp. and major messaging app provider Line Corp. said Monday they have struck a basic merger accord.

Yahoo Japan operator Z Holdings Corp. under SoftBank, a mobile phone unit of SoftBank Group Corp., and Line said they aim to finalize the agreement next month and complete the merger process by October 2020. They plan to hold a joint press conference at 5 p.m.

With the combined number of users in Japan exceeding 100 million, the two companies hope to expand their internet businesses including online retailing, advertising and mobile phone services based on their customer data.

The total sales of Yahoo Japan and Line would be the largest among Japanese online business operators, surpassing Japanese e-commerce giant Rakuten Inc. Their merger plan will need to pass scrutiny by antitrust authorities.

Under the basic agreement, SoftBank and South Korea's Naver Corp., the parent company of Line, will create a new joint company to hold a majority stake in Z Holdings.

SoftBank and Naver will make a tender offer for all shares in Line and Z Holdings will eventually make the app provider a wholly owned unit, which will be delisted as a privately held company.

Z Holdings posted group sales of 954.7 billion yen ($8.8 billion) in fiscal 2018 through March, while Line had sales of 207.1 billion yen in the business year ended last December.

"We aim to be an AI tech company to lead the world from Japan and Asia" in efforts to enrich people's lives, the two companies said in a statement.

The move came as the two Japanese tech firms were making efforts to follow their U.S. and Chinese rivals such as Amazon.com Inc. and Alibaba Group Holdings Ltd. amid fiercely intensifying competition.

SoftBank Group has also stirred concerns about its investment business since reporting a group operating loss of 704.37 billion yen for the July-September period, hit by the reduced value of its investment in the struggling U.S. operator of shared workspace provider WeWork.

Line has about 186 million active users of its messaging app in Japan, Taiwan and Southeast Asia, while more than 67 million people visit the Yahoo Japan website each month.

==Kyodo

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