Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 30 years of experience in the Korean/Asian equity research. Major sectors coverage include the following:
- Technology 
- Consumer 
- Special Situations/Deep Value Plays
- Tender Offers/M&As
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

LINE & Z Holdings Merger: Translated Summary of Regulatory Filing by NAVER

Z Holdings & LINE Merger: Behind Stories & Impact on JFTC Approval

Korea Stock Market Monthly Recap #42 (November 2019) & Korean Kimchi Pancake

Z Holdings (4689 JP): 2Q Is a Step in the Right Direction But We Remain Passive

Korea's View on Naver LINE & SoBank Yahoo Merger

Z and LINE, Sitting in a Tree... M.E.R.G.I.N... G...?

Event-Driven

On November 14th, it was reported in numerous media that <a href="https://www.smartkarma.com/entities/line-corp" target="_blank" data-smartkarma-citation="entities:22772:1" rel="noopener">LINE Corp (3938 JP)</a> may merge with Yahoo Japan. This deal is not finalized yet and the details are expected to be announced in the next few weeks.Why would these companies take these several more weeks to "ponder over" the final details of this deal while somehow "leaking" this potential deal to the media? One of the reasons why this deal may have been leaked earlier could have been due to Softbank's interest to deflect the negative criticism from the recent WeWork failed IPO disaster and shift the investors' attention on the more positive potential merger between LINE and Yahoo Japan.<div class="content-highlight">If we assume the potential annual synergies to be from 10 billion Yen ($90 million) to 30 billion Yen ($280 million) and using perpetuity discount rates ranging from 6% to 8%, this would suggest potential increase in market cap value by 125 billion Yen ($1.1 billion) to 500 billion Yen ($4.6 billion). The base case would be an increase in market cap value by 286 billion Yen ($2.6 billion). Interestingly, the market caps of LINE Corp and Z Holdings rose by $2.5 billion in the past two days after the announcement of the potential merger of the two companies. Naver's market cap also rose by $2.2 billion, although Softbank Group Corp's market cap declined by $0.3 billion in the past two days. </div>

On November 14th, it was reported in numerous media that LINE Corp (3938 JP) may merge with Yahoo Japan. This deal is not finalized yet and the details are expected to be announced in the next few weeks.Why would these companies take these several more weeks to "ponder over" the final details of this deal while somehow "leaking" this potential deal to the media? One of the reasons why this deal may have been leaked earlier could have been due to Softbank's interest to deflect the negative criticism from the recent WeWork failed IPO disaster and shift the investors' attention on the more positive potential merger between LINE and Yahoo Japan.If we assume the potential annual synergies to be from 10 billion Yen ($90 million) to 30 billion Yen ($280 million) and using perpetuity discount rates ranging from 6% to 8%, this would suggest potential increase in market cap value by 125 billion Yen ($1.1 billion) to 500 billion Yen ($4.6 billion). The base case would be an increase in market cap value by 286 billion Yen ($2.6 billion). Interestingly, the market caps of LINE Corp and Z Holdings rose by $2.5 billion in the past two days after the announcement of the potential merger of the two companies. Naver's market cap also rose by $2.2 billion, although Softbank Group Corp's market cap declined by $0.3 billion in the past two days. 

孫正義氏 - 「LINEとヤフージャパンの間で取引をしよう」

A Holdings

孫正義氏 - 「LINEとヤフージャパンの間で取引をしよう」