Kakao, Daum reportedly in merger talks

By Park Ji-won

Kakao, the leading instant messenger and mobile platform provider in Korea and Daum Communications, the nation’s No. 2 search engine, are reportedly in talks to merge.

The Maeil Business Newspaper quoted unidentified officials of investment banks as saying the two firms each held board meetings Friday to discuss the merger. The two companies will likely pursue it in the form of a shares exchange.

Officials from both Kakao and Daum were not immediately available for comments on the report.

There have been rumors about the merger between the two, but nothing has been confirmed.

Market insiders say if the two IT giants become one company, it would be worth more than 3 trillion won ($2.92 billion) in market value.

Daum is valued at 1.05 trillion won and ranked 11th on the Kosdaq with a 78,100 won stock price.

Shares in the unlisted Kakao were trading at some 120,000 won on the over-the-counter market ― its current estimated value is about 2.3 trillion won.

The merger could bring the long-accumulated Internet data of Daum to Kakao, while Daum would get a mobile platform and business foothold in overseas markets, according to industry insiders.

If the deal is done, the No. 1 web portal Naver, could be threatened.

KakaoTalk’s co-founder Kim Beom-soo owns 29.9 percent, the largest stake in Kakao, while K Cube Holdings owns 23.7 percent, according to the Financial Supervisory Service. K Cube Holdings is fully owned by Kim Beom-soo.

Daum founder Lee Jae-woong has a 14.6 percent stake in Daum.