A SoftBank Corp. subsidiary operating Yahoo Japan online services gained shareholders' approval Wednesday on its merger with messaging app provider Line Corp. aimed at creating Japan's largest online service company by October to better compete with U.S. and Chinese tech giants.

"We will get buried in a crowded market if we continue to go it alone" as U.S. and Chinese IT firms including Amazon.com Inc. and Alibaba Group Holding Ltd. enjoy economies of scale, Kentaro Kawabe, president of SoftBank's subsidiary Z Holdings Corp. told shareholders at their meeting in Tokyo. "The sooner we merge the better."

Z Holdings, which operates Yahoo Japan Corp.'s search engine and e-commerce services, and Line are set to complete merger procedures through a stock swap.

Under their deal, SoftBank, the mobile communication unit of SoftBank Group Corp., and Line parent Naver Corp. of South Korea will set up an equally held joint company, which will hold a 65 percent stake in Z Holdings. Naver owns 73 percent of Line.

Z Holdings, a surviving entity, will remain listed on the First Section of the Tokyo Stock Exchange and make Line and Yahoo Japan its wholly owned subsidiaries.

Yahoo Japan and Line with over 100 million combined users aim to expand investments in artificial intelligence and other new technologies to offer integrated services covering online retailing, social media and finance.

Yahoo Japan and Line have combined revenue of about 1.16 trillion yen ($11 billion), surpassing the 1.10 trillion yen of leading Japanese e-commerce firm Rakuten Inc.

Among overseas IT giants, U.S. social network service operator Facebook Inc. boasts 2.4 billion users and China's Tencent Holdings Ltd. has over 1 billion users.