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Why Line Stock Popped 26% on Wednesday

By Steve Symington - Nov 14, 2019 at 7:00AM

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The messaging app is in talks to potentially merge with Yahoo! Japan.

What happened

Shares of Line Corp. ( LN ) jumped 26.6% on Wednesday after Reuters reported the messaging app company is in talks for a potential merger with SoftBank's Z Holdings (formerly known as Yahoo! Japan). Separately, Z Holdings stock rallied 9.2% today on the news.

So what

Z Holdings confirmed the talks to Reuters late Wednesday, while Line issued a statement that it is indeed "considering ways to improve its corporate value" -- though both companies insisted nothing is set in stone just yet.

Chess board with black pawns on the left, wood colored pawns on the right, and one split with both colors in the center.


Now what

With a combined market capitalization of nearly $30 billion as it stands -- and with a Japanese user base of more than 80 million for Line -- Z Holdings and Line together could represent a veritable force to tackle Japan's budding QR code payment app industry. But the news shouldn't be entirely surprising considering Softbank not only owns nearly half of Z Holdings' outstanding shares, but also acquired a majority (51%) stake in Line's Mobile telco segment early last year.

That certainly doesn't guarantee the two companies will come to terms on a merger. But if they do, Reuters' sources suggested earlier Wednesday that it could happen by the end of this month.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

SoftBank Group Corp. Stock Quote
SoftBank Group Corp.
$49.66 (3.94%) $1.88
LINE Corporation Stock Quote
LINE Corporation
Z Holdings Corporation Stock Quote
Z Holdings Corporation

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