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Sat, August 13, 2022 | 00:29
Tech
Kakao acquires Loen
Posted : 2016-01-11 18:59
Updated : 2016-01-11 19:23
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Platform operator to become top music content provider

Rim Ji-hoonKakao CEO

Rim Ji-hoon
Kakao CEO

By Yoon Sung-won

Kakao has acquired Loen Entertainment, provider of the nation's most-used music streaming service MelOn.

Kakao announced on Monday that it will acquire a total of 76.4 percent stake in Loen Entertainment for 1.87 trillion won ($1.55 billion). Private equity fund Star Invest Holdings, Loen's previous largest shareholder, sold its 61.4 percent stake. Kakao said it will also seek for SK Planet's 15 percent stake.

Expectations are that Kakao, which is aggressively pushing to expand its platform business to a wider range of industry commerce, mobile games and mobile banking, has gained a major boost in securing entertainment content and a global market presence.

"Music is one of the most loved content genres in the mobile era," Kakao Chief Executive Office Rim Ji-hoon said in a statement.

"It is also incredibly powerful in that one song can set trends for an entire generation and highly influence the global pop culture.

"By combining Kakao's various platforms and content services and Loen's leading music content, we expect tremendous synergy that could establish a strong foundation for global expansion."

Kakao said it would issue new stock worth 750 billion won to Star Invest Holdings, Loen's previous majority shareholder, and others to secure the acquisition funds. The rest will be covered via Kakao's cash holdings, merger and acquisition financing and by inviting outside investments.

Established in 1978, Loen was acquired by SK Telecom in 2005 and later became a subsidiary of SK Telecom's affiliate SK Planet in October 2011. But SK sold its 60 percent stake in Loen to the equity fund in 2013 because it was illegal to operate Loen as a subsidiary without holding a 100 percent stake. At that time, Star Invest Holdings had agreed not to sell Loen to other Korea telecom operators ― KT and LG Uplus.

Loen's MelOn, with 28 million subscribers, has been the largest music content service here with more than 50 percent market share over KT Music's Genie, CJ E&M's Mnet.com and NHN Entertainment's Bugs Music.

Kakao plans to generate new demand in the content business by adding music streaming to its content services portfolio. In particular, the company is expected to tap into MelOn's presence in the entertainment content market in Asian countries, including China.

For Loen, collaboration with Kakao's extensive customer base will be a boost, tapping into the nation's most sought-after mobile messenger and platform KakaoTalk.

"We had already established a strong partnership with Kakao as a result of our participation in Kakao Bank," said Loen Entertainment Chief Executive Officer Shin Won-soo. "We expect to grow further with Kakao and become the leading content provider in Korea and beyond."

Loen said it will continue to solidify its position as the nation's top music platform with new services including streaming services based on social networks, user database-driven music curation, artist-centered online music creation communities and services that intertwine with other content on Kakao's multiple platforms.


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