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

Kakao, the Korea-based company behind the Kakao Talk mobile messaging app, is merging with Daum, the country’s second largest internet portal. The news is surprising, since Kakao had been tipped to go public before 2015 at a valuation of over $2 billion. The Yonhap News Agency reports that the merger will create a company worth three trillion Korean won ($2.9 billion) but there is no confirmed price at this point. The new entity will become the second largest company listed on the KOSDAQ, according to the news agency.

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.

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Written by Louie Baur

Louie Baur is Editor at Long Beach Louie, a Long Beach Restaurant Review site as well as Skateboard Park. Find him on Twitter, Facebook, and Pinterest.

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