Market bets on Google, Facebook takeover of KineMaster

A KineMaster user edits video using the app. / Courtesy of KineMaster

Kim & Chang selected as legal adviser to M&A

By Park Jae-hyuk

KineMaster shares have soared throughout this week, after its major shareholders confirmed their plan to sell their controlling stake in the mobile video editor services provider. Its share price closed at 29,050 won, Friday, up from 12,050 won a week earlier.

Founded in 2002 as NexStreaming, the Kosdaq-listed company operates the mobile video editor app KineMaster, which generates 80 percent of its revenue, and the mobile video player PlayerSDK, which generates the remaining 20 percent. It posted 8.6 billion won ($8 million) in sales during the third quarter, a 57.26 percent increase from a year earlier.

According to a regulatory filing by its largest shareholder Solborn, major shareholders of KineMaster agreed on Nov. 25 to sell a combined 55.02 percent stake. Solborn said the selection of an underwriter and advisory firms was underway.

A KineMaster official confirmed the company selected Kim & Chang as the legal adviser for the planned sale. A source familiar with the issue said the selection of the nation's top-tier law firm indicated the software maker's intention to talk with global players about an acquisition.

Market participants speculated that Google and Facebook are the strongest candidates.

KineMaster, which has subsidiaries in the United States, China and Spain, has carried out marketing campaigns using global social media platforms, such as Facebook, YouTube and TikTok. The number of subscribers to its YouTube channel tops 1.5 million.

As of the end of September this year, the KineMaster app hit 340 million downloads worldwide. The number of monthly active users of the app was 68 million on average during the third quarter. Because most of its users live outside Korea, the proportion of revenue generated overseas was 94 percent ― the U.S. accounted for 19.4 percent.

The company's market cap is around 370 billion won. Considering TikTok had previously been valued at 50 times its sales projection for this year, however, the valuation of KineMaster could possibly jump to 1 trillion won, according to industry officials.

"KineMaster's earnings will likely grow further because more users have begun to pay for its services," SK Securities analyst Park Chan-sol said in a report.

If the company is sold to Google or Facebook, it will be the first time for the global tech giants to acquire a Kosdaq-listed company.

The KineMaster official said nothing had been decided yet regarding the deal, except for the legal adviser. However, the official did not rule out the possibility of a foreign firm's acquisition because there were few companies providing similar services in Korea.

Google and Facebook declined to comment.

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