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Korean messaging app KakaoTalk to merge with Daum, the country’s second-largest web portal (UPDATED)

Kakao Talk

In yet another major development in the global chat app wars, popular Korea-based messaging startup Kakao looks set to merge with Daum, the country’s second-largest web portal. The Korea Herald reports that Daum announced the news this morning, and the two firms will hold a joint press conference later today with more details.

KakaoTalk has often been mentioned in the same breath as Line and WeChat, two messaging apps with massive parent companies (Naver and Tencent, respectively) and global ambitions. While Kakao spent money on aggressive ad campaigns in Southeast Asia, it never sought to reach users further toward the west – likely due to its comparatively small budget.

In Korea, however, KakaoTalk is a force of nature. Last year it brought in US$203 million in revenues and US$59 million in profits, the bulk of which it earns from selling stickers and game-related purchases.

Daum is known in Korea as a second fiddle to Naver, the country’s favorite search engine and long-standing entry point to the web. Naver also owns Line, the chat app of choice in Japan, Taiwan, and Thailand, but that company’s operations are run by an all-Japanese staff out of its Tokyo headquarters. BeSuccess describes Daum’s popularity in Korea as “tenuous,” so merging with Kakao could provide a much-needed boost on mobile – especially since Kakao will likely extend its reach into payments, ecommerce, and media content.

We’ve reached out to Kakao for more details and will update this piece as they come in.

[UPDATE May 26, 2014 @ 16:40]: Daum and Kakao have confirmed that the two companies will merge for form a new joint corporation to be known as Daum Kakao. The two companies will operate independently for the time being but will gradually  merge into a single entitiy. Kakao shareholders will receive approximately 1.556 newly issued Daum Kakao shares in exchange for each Kakao share held.

Daum CEO Sae-Hoon Choi gave the following statement:

Both companies have unique strengths that complement each other while sharing common values championing collaboration, openness and a strong belief in a non-hierarchical work culture. We believe that Kakao’s strong market position in the mobile sphere paired with our excellent content service and 20 years of operating experience will yield powerful corporate synergy.

Editing by J.T. Quigley; Heeseung Lee contributed to this piece

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