Kakao, the company behind mobile messenger app KakaoTalk, will acquire a controlling stake in South Korea’s leading music streaming company for KRW1.87 trillion ($1.58 billion).
Kakao will take a 76.4 per cent stake in Loen Entertainment’s MelOn, which has 28 million local users, the Korea Herald said.
The acquisition is intended to help Kakao diversify as growth in its mobile messaging business slows and give it a headstart on music streaming service Spotify, which hasn’t launched in South Korea.
According to local brokerage Hana Financial Investment, the country’s music streaming and download market was worth an estimated $406 million last year, Reuters reported.
It quoted HDC Asset Management fund manager Park Jung-hoon as saying: “Kakao is trying to draw a pretty big strategic picture, but it’s not clear whether they will be able to successfully monetise [the service].”
Kakao said it will issue KRW754 billion worth of new shares to Loen’s top two shareholders — Affinity Equity Partners and SK Planet.