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(LEAD) Global chat app LINE under suspicion over overseas listing push

All News 12:18 June 02, 2016

(ATTN: FIXES typo in para 7; ADDS more comments in last 2 paras)

SEOUL, June 2 (Yonhap) -- LINE Corp., the Japanese arm of South Korea's Internet giant Naver Corp., is suspected of pushing to list shares on overseas markets in a bid to allow its staff to exercise stock options for a profit, market watchers said Thursday.

Headquartered in Japan, LINE Corp. operates the mobile messenger LINE that is extremely popular in Japan, Thailand, Taiwan and Indonesia. The number of LINE's monthly active users came to 215 billion as of December last year.

LINE, the flagship of Naver, has been engulfed in speculation over its listing in the United States since July 2014. The company has insisted that it is considering such an option but nothing specific has been determined.

In the latest episode, Japan's Nihon Keizai reported Wednesday that LINE will likely list its shares in the U.S. and Japan as early as July.

LINE again refuted the report, saying "no decision has been made." But analysts say the mood is "considerably" ripe for the company's overseas initial public offering (IPO), given its recent efforts to cut costs and improve earnings this year.

In late April Naver reported that its first-quarter net income jumped 22.7 percent on-year to 165 billion won (US$138 million) on the back of its robust overseas business. Naver failed to disclose how much LINE contributed.

"LINE's overseas stock listings appear to be in the offing," an analyst said, asking not to be named.

The primary purpose of LINE's overseas listing is widely seen as aiming to enable top managers and its employees to exercise their stock options, which give holders the right to sell shares at an agreed-upon price within a certain period or on a specific date.

Naver owns 100 percent of LINE with 175 million outstanding shares. Of the total, 14.6 percent has been granted to its senior managers and staff members in stock options since 2012, which could be exercised only when the company is listed.

Watchers said some of the stock option holders are known to be eager to see LINE shares listed on overseas stock markets.

They added now the market focus is on how LINE will be assessed in overseas stock markets.

On the South Korean stock market, shares of Naver tumbled 7.5 percent at one point on Wednesday on Japanese media reports that LINE's market capitalization could stand at only 600 billion yen ($5.42 billion). Local analysts have estimated that LINE may raise at least 1 trillion yen.

Some watchers said Naver's share price will likely be on the skids down the road once LINE is priced below expectations. "There is a high possibility of Naver's share price going south in the medium and long term should the company be listed under current conditions," a market analyst said.

Others, however, struck an optimistic note, saying Naver's fall may be short-lived and the outlook is very bright for growth of the company and LINE.

"LINE's advertising business is expected to get into full gear from the second half of this year, helping boost its revenue" said Chung Ho-yoon, a researcher at Eugene Investment & Securities Co. "The issue of LINE's listing will inevitably have a negative impact on Naver's share price, but there will soon come an opportunity for bargain hunting."


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