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Business deals

SoftBank and Naver bid for Line shares gets lukewarm reception

Offer to buy out minority investors ends with less than half of shares tendered

SoftBank Group wants to merge its Z Holdings with Line, owned by South Korea's Naver. (Source photos by Wataru Ito and Manami Yamada) 

TOKYO -- A tender offer by SoftBank Corp and South Korea's Naver for shares in popular messaging app Line has had a lukewarm reception, after a boom in tech stocks prompted calls from some minority shareholders for a higher offer. 

SoftBank Corp, the Japanese telecommunications arm of SoftBank Group, teamed up with Naver last year to create a $30 billion internet giant by merging Naver-owned Line and SoftBank-owned Z Holdings. A joint tender offer to buy out Line minority shareholders was the first step in a complex merger that is expected to be completed next year. 

SoftBank and Naver on Wednesday said they bought 29.5 million shares, not including U.S.-listed American depository receipts, out of a possible 88.3 million shares.

A SoftBank spokesperson said it had no comment on the result because it did not set a minimum threshold. SoftBank and Naver plan to buy out the remaining Line minority shareholders through a squeeze-out process. Naver already held 72% of Line shares ahead of the tender offer. 

Metrica Partners, a Singapore-based hedge fund and minority shareholder in Line, has said the 5,380 yen ($51) per share offer is too low. Shares in both Naver and Z Holdings have climbed during the coronavirus pandemic, while Line's share price has been hovering near the tender offer price. 

Also among Metrica's arguments is that two members of a special committee that supported the tender offer joined the board of Z Holdings in June, a move that did not meet the recommendations outlined in the Japanese government's fair M&A guidelines.

On Wednesday, Metrica wrote to Line chairman Hae-Jin Lee calling for the company to postpone an extraordinary general meeting, and to request SoftBank and Naver to resubmit their tender with a "fair price" and a minimum acceptance condition.

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