[WSJ] Daum Kakao Faces Questions Over Ability to Grow Outside South Korea

October 3, 2014

 

(Kakao officially acquired Daum on Oct. 1)

(Kakao officially acquired Daum on Oct. 1)

[WSJ] SEOUL—A new technology company emerged Wednesday in South Korea, the product of a tie-up between two of the country’s dominant Internet players—one from the PC era, one from the mobile era.

Shares of Daum Communications Corp. 035720.KQ -4.20% surged as much as 9.9% Wednesday and closed 5.6% higher, the day Daum was officially acquired by Kakao Corp., on hopes that the tie-up will allow the two companies to compete better as a “mobile lifestyle platform” leader, as they put it. Daum’s shares have more than doubled since the announcement in May of the all-stock deal that would create Daum Kakao, which will issue 43 million new shares to Kakao shareholders this month at a price to be determined by the market.

Daum Kakao will be a titan in its home market from day one, largely because of thedominance of Kakao’s mobile messaging platform Kakao Talk, which is installed on 93% of smartphones in South Korea. Using the latest stock price, Daum Kakao will have a market capitalization of nearly $10 billion once the new shares list in mid-October. The listing will put the company atop the country’s technology-focused Kosdaq market.

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