Investors bullish about Naver on Line-Yahoo Japan merger

Following the announcement, Hanwha Investment & Securities raised the target price for Naver from 180,000 won ($154) to 240,000 won. Hana Financial Investment increased the price from 190,000 won to 240,000 won.

Yuanta Securities and Korea Investment & Securities also raised the price for the nation’s largest portal operator from 205,000 won to 240,000, and from 185,000 to 210,000 won, respectively.

“Through the deal, the two companies will be able to enhance the market power of their competing services while complementing one another in other services,” Hana Financial Investment analyst Hwang Seung-taek said.

Korea Investment & Securities analyst Jeong Ho-yoon said Naver’s enterprise value is expected to increase by 3 to 4 trillion won through the venture, calling on investors to pay attention to the company’s performance improvement in the long term.

“The two companies have competitively carried out marketing activities for their digital payments services, thus there is greater possibility for their marketing costs to be significantly reduced,” Jeong said. “A variety of services will be integrated and this will generate big data to advance their fintech and other businesses quickly.”

Naver owns 73 percent of Line, while SoftBank Group has a 45 percent stake in Z Holdings.

The two sides plan to finalize their deal by the end of the year, under which Naver and SoftBank will set up a 50-50 joint venture that will become the largest shareholder of Z Holdings. Z Holdings then would wholly own Line and Yahoo Japan.

As Line and Yahoo Japan have about 80 million users and 50 million users, respectively, the joint venture will to create a Japanese-Korean mega-platform with more than 100 million users.

NH Investment & Securities analyst Ahn Jae-min said the deal will bring strong competitiveness that encompasses search, mobile messenger, e-commerce, internet, fintech, content and artificial intelligence businesses.

“Naver will be able to become a company that can match global internet giants,” he said.

On Nov. 14, when news of the deal was made public, Naver’s shares soared 13.92 percent to 180,000 won. Since then, the price has fluctuated, closing at 169,500 won, Wednesday, down from 170,500 won the previous day.