Naver says exploring all options including stake sale in Line operator (updated)

LY

10/05/2024 08:08

(Updates with statement from South Korean government)
    By Hyunsu Yim
       SEOUL, May 10 (Reuters) - South Korea's Naver
 035420.KS  said on Friday it is exploring various options
including the potential sale of its stake in the company that
controls LY Corp  4689.T  which operates the popular messaging
app Line.
    In a statement, Naver, which holds an equal stake with
SoftBank  9434.T  in a joint venture that controls LY Corp,
apologised for the recent security breach that led the Japanese
government to issue an administrative guidance. 
    "Naver will continue to put top priority on Naver
shareholders and on raising the corporate value of Naver and
LINE Yahoo as its major shareholder and partner as we make
important decisions," it said in a statement.
    "Related to the issue at hand, we are negotiating with
SoftBank in good faith and open to all possibilities including
the sale of our stake to achieve the best outcome for the
company," it said.
    South Korea's science and communications ministry expressed
regret over what it said was a perception that Naver was being
pressured to sell its stake and pledged to support the company
if it intended to maintain its stake in the joint venture.
        Vice minister Kang Do-hyun also told a briefing any
decision  must made by Naver with its business interests as the
key focus and the government would respond strongly if there was
any unjust action against South Korean businesses.
  
        "The government confirms that there is no expression in
the administrative guidance (by the Japanese government)
requiring  a stake sale, but we express regret that there is the
perception of pressure on our company to sell the stake," he
said.
  
        He denied that the South Korean government has been
reluctant to become involved because of President Yoon Suk
Yeol's push to improve ties with Tokyo.
  
    Political tensions had previously led to trade disputes
between the countries, with Tokyo in 2019 putting export curbs
on some high-tech materials. The restrictions were lifted last
year as the governments mended ties, after Yoon came to office. 
    LY Corp said in November last year that there had been
unauthorised access of its systems by a third party via Naver's
cloud system. This led to the leak of the personal data records
of more than 300,000 Line users and others.
    Although the guidance from Japan's internal affairs and
communications ministry about the data leak did not explicitly
mention a sell-down, it did direct LY Corp to "review the
relationship where the outsourced company has a significant
degree of capital control", referring to Naver.
    Since the move by the Japanese government, Naver and the
South Korean government have faced domestic criticism for not
taking a more proactive stance to protect Naver's interest in LY
Corp.
    On Friday, the main opposition Democratic Party said it was
long overdue for the government to take strong action.
        "To have Line taken away is to have our economic
territory taken away," a spokesperson for the main opposition
Democratic Party said in a statement, adding it amounted to
"corporate extortion." 
  

 (Reporting by Jack Kim
Editing by Ed Davies)
 ((jack.kim@thomsonreuters.com; +822 6936 1455;))