SEOUL, South Korea (AP) — Mobile messenger service Kakao Talk is seeking a backdoor listing on the South Korean stock exchange by combining with the country's second largest Internet portal.
Daum Communications Corp. and Kakao Corp. said Monday that Kakao shareholders will get 1.556 Daum shares for each Kakao share they own.
If the deal gets approval from a meeting of shareholders in August, shares in the new entity called Daum Kakao will start trading in October. Kakao's founder Brian Kim will be the largest shareholder in the new entity.
The deal is the latest in series of mergers and acquisitions in the mobile messenger app market. Earlier this year, Facebook announced a takeover of WhatsApp for $19 billion and Japan's Rakuten said it will buy Viber for $900 million.
Kakao Talk is South Korea's most popular mobile messaging service for smartphones. But it has struggled in overseas markets dominated by other mobile apps such as WhatsApp, Line and WeChat.
Daum's web portal has been a perennial runner-up to Naver, which dominates the South Korea's Internet market.
Naver also owns Line, which has about 400 million users. The Line messenger has been a cash cow for Naver and a competitive threat for both Daum and Kakao.
Daum said that with the deal the two companies can offer strengths that each is in need of.
Daum's mobile Internet services have been unpopular while Kakao gets additional resources to challenge Line and other messaging apps overseas.
Earlier this year, Kakao scrapped plans for an initial public offering in 2015.