SoftBank subsidiary Z Holdings (formerly Yahoo Japan) is to merge with mobile messaging app Line (owned by Naver) in a deal designed to create a $30 billion company capable of competing with US and China tech powerhouses.

In a statement, SoftBank said “there is currently a big difference between such overseas companies and those in Japan and other Asian countries, other than China.”

A legally binding contract is targeted to be inked in December with the deal to be completed by October next year.

Talks have concluded quickly after first reports leaked last week.

SoftBank and Naver will each hold a 50 per cent stake in Z Holdings, which will control Line and Yahoo Japan.

The deal values Line at $11.5 billion. Line has over 82 million users in Japan according to figures from Statistia for Q3 this year. The app offers an array of services alongside instant messaging such as mobile payment, taxi hailing and music streaming.

Yahoo records over 50 million active users, remaining a popular search engine in Japan, while its Western presence has diminished.

Together, Line and Yahoo Japan will be able to share engineering resources, access broader sets of data and invest more in areas like artificial intelligence, chief executive officers said in a Tokyo press conference.