Kakao and Daum are merging to become KOSDAQ’s second largest company

Kakao Corp., South Korea’s largest mobile messaging service, agreed to buy Daum Communications Corp. (035720) to jump-start growth and gain a listing. Kakao shareholders will hold more than two thirds of the combined company after a reverse takeover that values Kakao at 3.1 trillion won ($3 billion), based on the terms of a Daum regulatory filing. Daum will be renamed Daum Kakao and the new company will be listed in October. The deal follows Facebook Inc.’s acquisition of messaging app WhatsApp Inc. for as much as $19 billion and Rakuten Inc.’s $900 million takeover of Viber earlier this year. The transaction also makes Kakao board Chairman Kim Beom Su a billionaire after he co-founded Kakao, which had said it was aiming for an IPO next year, in 2006. Kakao decided that expanding on its own would take too long and leave the company lagging behind competitors, Chief Executive Officer Lee Sirgoo told reporters in Seoul today.