SoftBank Corp.'s group company controlling Yahoo Japan Corp. and major messaging app provider Line Corp. are considering merging their operations by the end of 2020, sources familiar with the matter said Saturday.
Yahoo Japan operator Z Holdings Corp. under SoftBank, a mobile phone unit of SoftBank Group Corp., and Line will announce their merger plan possibly next week, the sources said.
SoftBank and Line hope to expand their internet businesses including online retailing, advertising and mobile phone services, the sources said.
In fiscal 2018 through March, Z Holdings posted group sales of 954.7 billion yen ($8.76 billion) while Line had sales of 207.1 billion yen in the business year ended last December.
The combined sales of Yahoo Japan and Line would be the largest among Japanese online business operators, surpassing those of e-commerce giant Rakuten Inc.
Line has about 164 million users of its messaging app in Japan, Taiwan and Southeast Asia, while more than 50 million people visit the Yahoo Japan website each month.
Z Holdings and Line plan to separately operate their smartphone payment services after aggressively investing for expansion in the fiercely competitive cashless payment service market.
Z Holdings' Paypay service has 19 million users, while Line Pay has 37 million users.
The companies will consider eventually merging their digital payment businesses depending on the outcome of an antitrust review, the sources said.
SoftBank and South Korea's Naver Corp., the parent company of Line, are considering merging the units under a new joint company, other sources have said.
Line has expanded its business to online shopping and music distribution. It posted a group net loss of 33.9 billion yen in the nine months through September due to increased costs.
The messaging app provider expects to receive a capital injection from SoftBank to improve its financial footing.
Z Holdings recently invested about 400 billion yen to acquire a majority stake in online apparel retailer Zozo Inc.