The Japanese holding company SoftBank’s internet subsidiary Z Holdings has outlined plans to invest $4.7 billion in technology over five years to resist increasing competition from larger overseas rivals.
The announcement follows the merger of its internet business Yahoo Japan with chat app operator Line, creating a $30 billion domestic internet giant.
Z Holdings said it is targeting sales of $0.18 trillion and operating income of $2.1 billion in three years, as the COVID-19 pandemic boosts demand for online services.
Following a complex transaction, two thirds of Z Holdings shares will be owned by a new holding company, A Holdings, half owned by SoftBank Corp and South Korea’s Naver owning the other half. Z Holdings remains a consolidated subsidiary of SoftBank. Naver was the previous majority owner of Line.
The CEOs of Z Holdings and Line, Kentaro Kawabe and Takeshi Idezawa respectively, become co-CEOs of the combined entity, reflecting the hybrid origin of the firm which combines eCommerce, payments, advertising and chat.
Mr. Kawabe pointed to the breadth of those services, many of which are deeply embedded in the lives of Japanese consumers, as its defence against American rivals like Google parent Alphabet and Amazon and their larger research budgets.
In an early indicator of efforts to save on costs, Z Holdings said it was looking to integrate Line’s QR code payment service Line Pay into peer PayPay, which SoftBank has promoted aggressively to attract consumers away from cash, in April 2022.
Z Holdings retains its listed status, one of a number of such firms among SoftBank’s domestic holdings, despite calls for Japanese firms to unwind such structures. Z Holdings also controls online fashion retailer Zozo Inc and office supplies firm Askul.