SoftBank-backed Z Holdings will merge with its two wholly owned subsidiaries — Yahoo Japan and messaging app Line — by March 2024 to streamline its operations in a bid to position itself as a world-leading artificial intelligence company.

Z Holdings President Kentaro Kawabe made the announcement Thursday after the decision was approved by its board of directors, but details are yet to be made public.

Line President and Z Holdings co-CEO Takeshi Idezawa will become Z Holdings president on April 1, while Kawabe will become chairman.

Idezawa will have to guide the company through the challenge of declining advertising revenue — a previous growth driver for the company. The fall was highlighted by Z Holdings’ third-quarter results for fiscal 2022, which ends in March, released on the same day.

In March 2021, Z Holdings joined with Line — Japan’s most popular messaging app — with plans to grow its user base outside of its home market and capitalize on Line’s popularity in Thailand, Indonesia and Taiwan. The consolidation gave Z Holdings a combined 300 million users.

Yet the firm has apparently been struggling to live up to expectations.

SoftBank CEO Junichi Miyakawa said he has been frustrated with the performance of the Z Holdings-Line alliance over the past two years.

"(At first) we were very excited because we thought they would be able to do a variety of things together, but in the past two years ... they have not really been able to produce new products,” he said during a news conference Friday.

“This was not what we expected,” Miyakawa said, adding that he had told Z Holdings to work at a faster pace.

Miyakawa welcomed the restructuring announcement, saying, “I believe things will change quite a lot.”

Last year, Z Holdings also merged Yahoo Japan's online shopping platform with PayPay Mall, with a view to beating competitors such as Amazon and Rakuten.

The merger between Z Holdings and Line was announced back in 2019. It was originally planned to be completed in October 2020, but was delayed due to the COVID-19 pandemic. Line also faced scrutiny for its handling of users' personal data, prompting an internal review.