Online services Yahoo Japan and Line Corp. have announced they are merging.
Z Holdings Corp., which owns SoftBank Corp. that operates Yahoo Japan, and Naver Corp. of South Korea, which owns a majority stake in Line said Monday they are aiming for a final agreement by next month.
The combination in a joint venture through a tender offer will form an online giant with retail services, advertising and other mobile services such as messaging.
Their combined sales would be the largest among Japanese online business operators, surpassing Rakuten Inc., according to Kyodo news service.
The companies said combining forces will allow them to stay competitive in a drastically changing market, including expansions into robotics and other new areas.
The integration will be carried out equally, according to the companies, but the price is expected to be decided in December.
A discussion had been ongoing between Naver and Z Holdings since June, they said. After a deal is completed, Line will get delisted.
The new company will seek to answer to Japan's social needs such as a shrinking worker population and natural disasters, SoftBank said in a statement.
"Social and industrial conditions surrounding us are changing drastically and daily on a global basis," it said, adding that Japan needs to catch up, and coming together might help.
"Particularly in the Internet market, overseas companies, especially those based in the United States and China, are overwhelmingly dominant."