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SEOUL (Reuters) - Shareholders of South Korean internet portal operator Daum Communications Corp and messaging application firm Kakao Corp approved on Wednesday an all-stock merger between the two firms, paving the way for a back-door listing that values Kakao at over $3 billion (1.81 billion pounds).
The deal, scheduled to be completed in October, allows Kakao to avoid a time-consuming initial public offering process and also allows the firm to bulk up amid intensifying competition in the global messaging app market.
While Kakao's KakaoTalk remains the undisputed leader in South Korea, its global user base is far smaller than the likes of WhatsApp or Naver Corp's Line. The merger with Daum, South Korea's No. 2 internet search company, will give Kakao new lines of revenue and boost its resources for overseas expansion.
Daum will issue 43 million new shares to Kakao shareholders based on a valuation of 72,910 won per share, according to regulatory filings, valuing the messaging app operator at 3.1 trillion Korean won ($3.06 billion). Kakao shareholders, which include chairman Kim Beom-su and Chinese Internet firm Tencent Holdings Ltd, will own about 60 percent of the enlarged company.
The merged entity will have two chief executives: Kakao co-CEO Lee Sir-goo and Daum CEO Choi Sae-hoon.
(Reporting by Se Young Lee; Editing by Michael Perry and Kenneth Maxwell)