South Korea's Kakao to merge with Daum in back door listing
SEOUL (Reuters) - South Korea's Kakao Corp said it will merge with the country's No.2 Internet portal Daum Communications Corp (035720.KQ) in a back-door listing that values the messenger operator at 3.1 trillion won ($3 billion).
With the all-stock deal, unlisted Kakao has dropped previous plans for an IPO by 2015 and turned itself into a serious challenger to Naver Corp (035420.KS), the country's biggest Internet portal operator, which also owns rival mobile messenger operator Line.
The two companies said they had agreed that each Kakao share is worth 113,429 won. Daum will issue 43 million new shares to Kakao shareholders, including 33 million common shares.
"The synergies from the deal are obvious. The deal will give
firepower to Kakao to aggressively expand its business here and overseas, while Daum will have a mobile messaging service as its new growth engine," said Kim Mi-song, an analyst at Hyundai Securities.
Kakao Corp operates South Korea's dominant mobile messenger service, Kakao Talk and it has some 145 million users globally, although it has been less successful than Line at expanding overseas.
The newly merged company will be called Daum Kakao.
Kakao reported 55.6 billion won of net profit last year on 211 billion won of revenue.
The back door listing comes after a flurry of deals in the mobile messenger industry in recent months. In February Facebook Inc (FB.O) announced the purchase of mobile messaging startup WhatsApp for $19 billion.($1 = 1024.5500 Korean Won)
(Reporting by Hyunjoo Jin. Additional reporting by Se Young Lee and Sohee Kim; Editing by Edwina Gibbs)