South Korea's Kakao to merge with top online portal

SEOUL (AFP) - South Korea's top messaging service provider, Kakao, and its second largest Internet portal, Daum, announced a merger Monday to create a company with an estimated market value of US$3 billion (S$3.8 billion).

Daum Communications, the operator of portal Daum.net, said the merger with Kakao, which runs the hugely popular mobile chat app Kakao Talk, would be completed in October through share swaps.

The move was aimed at "enhancing core businesses and creating business synergy", Daum said in a regulatory filing.

It said the swap ratio had been set at one Daum share for 1.55 Kakao shares.

Kakao Talk is used by more than 140 million people globally, including some 35 million South Koreans - more than 90 per cent of the country's smartphone users.

Founded in 2007, Kakao has not gone public yet, but its shares are traded over the counter in Seoul and it has an estimated market value of two trillion won (S$2.4 billion).

The company's founder Kim Beom-Soo has a controlling 53.6 per cent stake in Kakao. Chinese Internet giant Tencent also has a 13.3 per cent stake.

Daum - founded in 1995 - has some 30 million users and is valued at some one trillion won on Seoul's tech-heavy Kosdaq stock market.

South Korea is one of the world's most wired countries, with 37 million owning a smartphone out of a population of 50 million.