Daum-Kakao Merger
Daum Communications, South Korea's second-largest Internet portal, announced early in the morning on May 26 that it will acquire Kakao, the country’s top mobile messenger service, through a stock swap arrangement.
“The merger will solidify core business operations and create positive synergy,” Daum said through a regulatory filing, adding, “The swap ratio has been set at one Daum share for 1.5557456 shares of Kakao.”
The M&A deal will create an information technology (IT) firm with market capitalization of over 3.4 trillion won (US$3.318 billion). The two companies are expected to elaborate on the merger later in the day at a press conference in Daum’s headquarters in Seoul.
The merger is expected to take place on Oct. 1.
There was widespread speculation early this year that the two companies were discussing their merger behind the scenes, since Daum’s needs for a new market in mobile services and Kakao’s interests in web-based content seemed to fit perfectly together.
A news organization quoted sources in the financial investment industry on May 24, reporting that each firm already discussed a M&A deal by holding a board meeting on May 23.
Experts are saying that it will become a win-win deal, because Kakao can secure various content in the local market through the merger. Daum is also expected to have a mobile platform through the deal. Nevertheless, there are mixed views as to whether or not the deal will be able to generate synergy in the global market.
