South Korea top mobile chat app, online portal merge

2014-05-26 09:32
Google's Android operating system will reach on billion devices. (Duncan Alfreds, News24)

Google's Android operating system will reach on billion devices. (Duncan Alfreds, News24)

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Seoul - South Korea's top messaging service provider, Kakao, and its second largest internet portal, Daum, announced a merger on Monday to create a one of the country's largest IT companies worth around $3bn.

Daum Communications, the operator of portal Daum.net, said the merger with Kakao, which runs the hugely popular mobile chat app Kakao Talk, would be completed in October through share swaps.

The move was aimed at "enhancing core businesses and creating business synergy", Daum said in a regulatory filing.

It said the swap ratio had been set at one Daum share for 1.55 Kakao shares.

The newly merged company - named Daum Kakao - will benefit from Kakao's popularity on mobile platforms as well as Daum's business clout and experience with internet searches and ad sales, the two firms said in a joint statement.

The deal "will put us in a strong position to respond to fast-changing global market", Kakao chief executive Lee Seok-Woo said in the statement.

Shares

The merged company will be better positioned to compete with South Korea's dominant internet portal Naver which operates Line, a messaging service and rival to Kakao Talk that is popular in Japan and Southeast Asia.

Kakao Talk is used by more than 140 million people globally, including some 35 million South Koreans - more than 90% of the country's smartphone users.

Founded in 2007, Kakao has not gone public yet, but its shares are traded over the counter in Seoul and it has an estimated market value of two trillion won ($1.9bn).

The company's founder Kim Beom-Soo has a leading 30% stake in Kakao and a venture company Kim owns also has 23.7% shares.

Chinese internet giant Tencent also has a 13.3% stake.

South Korea is one of the world's most wired countries, with 37 million owning a smartphone out of a population of 50 million.
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