Daum and Kakao merge, massive valuation puts them head-to-head with Naver-Line

Two of Korea’s strongest players in the mobile space, Daum and Kakao, have completed a merger today, following an initial announcement back in May. According to Yonhap News Agency, the new entity is valued at close to a massive sum of 10 trillion won (US$9.45 billion).

Despite Kakao’s market value nearly quadrupling Daum’s, the latter will be taking over former. The report adds that Kakao will be getting a backdoor listing through the merger on KOSDAQ, instead of going public the following year as they initially planned.

The newly merged firm, which will be called Daum Kakao, will certainly give Korea’s  Naver a run for its money. Naver continues to enjoy local dominance as the number one search engine in Korea, though its Line messenger service, which operates from its subsidiary in Japan, has a wider audience outside of Korea than  it does within.

In an official statement, Daum Kakao executives used the phrase “Connect Everything” to describe the company’s vision for its future. The company pointed out four types of connections it will develop moving forward – “people to people,” “people to information,” “online to offline,” and “people to things.” In other words, expect Daum Kakao’s trajectory in Korea to follow that of Tencent’s WeChat in China, in which a messaging app gradually evolves into an shopping epicenter, news portal, and a tool for the “internet of things.”

Naver had recently postponed an IPO for Line, believing that they can command a better valuation by further building its revenue and profit, according to Naver’s chief financial officer. If they had gone ahead with the IPO, the resulting valuation was said to have have exceeded US$10 billion.

See: KakaoTalk reveals it has 140 million users, made $203 million in revenue last year