Naver says exploring all options including stake sale in Line operator

In a statement, Naver, which holds an equal stake with SoftBank 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.

South Korea's Naver said on Friday it is exploring various options including the potential sale of its stake in the company that controls LY Corp which operates the popular messaging app Line. In a statement, Naver, which holds an equal stake with SoftBank 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."

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