updated 06:45 pm EDT, Tue May 27, 2014
Stock swap deal creates company valued at close to $2.9 billion
Daum Communications, the second largest Internet portal in Korea, will undergo a merger with the company responsible for the Kakao Talk messaging app, Kakao Corporation. The deal will take place through a stock swap, creating a company that is valued at close to $2.9 billion. The merger will allow the resulting company to be a better competitor to the region's largest Internet company, Naver, say representatives for Daum and Kakao.
The merger was agreed upon in a board of directors meeting last week, with details to be given to shareholders in August. Once finalized, the completion of the merger is scheduled to take place on October 1. Each shareholder of Kakao will receive 1.556 shares of the new company when it is completed.
The new company, Daum Kakao, will become the second largest company by "value of listed stock" on the KOSDAQ, according to Yonhap News. "Kakao's competitiveness in the mobile platform, coupled with Daum's strengths in contents and service business know-how, will fuel growth," said Choi Sae-hoon, CEO of Daum.
Information on how the companies will be structured after the merger has yet to be finalized. Statements from Bloomberg indicate that the companies will be operated separately "for the time being," with no indication on who will be running Daum Kakao.