Line Agrees to Acquire Stake in Game Developer Gumi

Line Corp. agreed to buy less than 10 percent of game developer Gumi Inc. as the operator of Japan’s most popular mobile messaging service seeks to win users overseas.

The size and value of the stake is under discussion, the two companies said in a joint statement at a press conference in Tokyo today. Line is seeking alliances with local and global companies outside the gaming business as well, Jun Masuda, chief strategy and marketing officer, said at the briefing.

South Korea’s Naver Corp. created the Line application after the March 2011 earthquake and tsunami in northeastern Japan knocked out telephone services and now has users in at least 230 countries and regions. The free messaging service, which makes money by asking users to pay for teddy bear icons and has added features such as games, free voice and video calling, photo and video sharing, is partnering Tokyo-based Gumi that has operations in countries including France and the U.S.

“Together with Gumi, Line wants to provide more content on Line’s platform to attract global users,” Masuda told reporters. Line has more than 490 million users globally, according to the statement.

Gumi seeks to win more users in Europe, and North and South Americas through its partnership with Line, Chief Executive Officer Hironao Kunimitsu said at the briefing.

The alliance with Gumi comes as Line proposes an initial public offering in Tokyo and New York. Gumi also plans to go public as early as December, people with knowledge of the matter said last month.

Fund for Developers

Separately, Line unveiled a plan to set up a 10 billion yen ($98 million) fund to invest in Japanese game developers. The fund is tentatively named Line Game Global Gateway and will be managed by Line Ventures, to be formed under Line, it said.

Gumi employs about 800 people and operates in South Korea, Singapore, China, France and the U.S., according to the company’s website. Its investors include Jafco Co., Japan’s biggest venture-capital firm, as well as Gree Inc., Mitsubishi UFJ Capital Co. and Development Bank of Japan Inc.’s investment unit, the website shows.

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