Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Kakao's merger with Kakao Commerce stokes stock price
By Anna J. Park
By Anna J. Park
As Kakao is set to merge with its e-commerce subsidiary, Kakao Commerce, the big tech firm's stock price hit a record high on Monday.
Kakao's share price finished at 142,500 won ($127.60), 5.17 percent up from the previous session, as investors showed their optimism over the merger plan. During intra-day trading, its stock price hit the all-time high of 143,000 won, beating the previous record high of 136,500 won. Foreign investors have been net-buying Kakao stocks for the past five consecutive trading sessions, while on Monday, it was retail investors who net-purchased the stocks, reflecting expectations for their performance.
Kakao's stock price has skyrocketed by more than 80 percent since the start of this year. Since the stock underwent a 5-for-1 split in mid-April, the price has risen by 27 percent.
The company said that the merger between Kakao and its subsidiary, Kakao Commerce, has yet to be finalized, as the decision is subject to approval during its board meeting, scheduled for later this month.
“Since the merger plan has to go through the board of directors to be finalized, we can only say now that the two firms are currently examining various ways of maximizing the synergy effect,” an official from Kakao said.
Once confirmed through the vote at the board of directors, Kakao Commerce will operate as a “company in company” (CIC) within Kakao Corp., meaning that Kakao Commerce will retain its independent mode of business free from Kakao's grip. Current Kakao Commerce CEO Hong Eun-taek will continue to lead the commerce organization's business within Kakao, even after the merger becomes official later this month.
Kakao is aiming to put more emphasis on e-commerce shopping, in which people buy products directly through a platform, shifting away from the current ad-focused business model, in which people buy products advertised via separate sites. Although Kakao Commerce spun off from Kakao back in 2018, the e-commerce arm's core profit-making model has been closely interlinked with Kakao's KakaoTalk messenger. Kakao seems to be convinced that the company could grow further by aggressively strengthening its e-commerce service within the messenger platform.
Once the merger process is completed, sometime during the third quarter of this year, as analysts expect, Kakao could be positioned to better compete with existing local e-commerce leaders like Naver and Coupang. Kakao Commerce reported an annual revenue of 573.5 billion won, last year, with an operating profit of 159.5 billion won, a 94 percent and a 110 percent increase, respectively.
With Monday's price jump, Kakao ― the company with the fourth largest market cap, with over 63.26 trillion won ― is is in a close chase with Naver, the company with the third largest market cap on the KOSPI, with 63.56 trillion won.