Kakao Corp., operator of South Korea’s largest messaging app Kakao Talk, will merge with its subsidiary KakaoM, owner of the country’s top music streaming service Melon, in a bid to reinforce its platform business.

According to Kakao and KakaoM, the boards of each company on Thursday approved a deal to merge the two companies. The deal will have to receive the final okay from Kakao’s shareholders on July 5. The merger is set to be completed on September 1.

Kakao expects the combination of the two platforms would create bigger synergy.

“The marriage of Kakao Talk and Melon will create a novel way of consuming music,” said a Kakao official. “This all plays into our strategy of bolstering our platform as well as our contents.”

Kakao will work on ways to incorporate 4.65 million of Melon users and its vast music database with its messaging service to help broaden its combined platform. It has already adopted a new feature, Melon with Kakao, which allows users to share music via Kakao Talk and set music on their messenger profile.

While absorbing Melon’s music platform business, Kakao said it plans to launch a separate entity for content business that will focus on developing and operating music and video contents. It vowed to make aggressive investments and seek mergers and acquisitions to help the content business become a major global player.

Kakao acquired Loen Entertainment in March 2016 and rebranded it to KakaoM. The 1.87 trillion won ($1.73 billion) deal - the largest ever in Kakao’s history - has largely been deemed a success, contributing to Kakao’s solid performance. KakaoM generated 102.7 billion won in operating profit on revenue of 580.4 billion won last year, claiming its title as the undisputed leader in Korea’s music streaming industry.

Shares of Kakao closed Friday down 2.58 percent at 113,500 won while those of KakaoM fell 5.1 percent to 93,100 won.

By Lee Sun-hee and Kim Hyo-jin

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]