South Korea’s mobile content platform Kakao Page Corp. is seeking to merge with its entertainment affiliate Kakao M Corp. to enhance its business portfolio and enterprise value before its stock market debut next year, according to multiple market and industry sources.

A plan to merge the two content units of Kakao Corp. is at a final stage after months of review, a source knowledgeable in Kakao’s affairs said on Wednesday. “This scheme is expected to expedite Kakao Page’s planned IPO,” the source added.

Both Kakao Page and Kakao M are affiliates under Kakao, the operator of the country’s dominant messenger app Kakao Talk. Kakao Page, Kakao’s main content platform for webtoons, novels, and movies, has been preparing for an initial public offering (IPO) on local stock market next year. The syndicate of NH Investment and Securities and KB Securities was formed last year.

Market experts estimate Kakao Page’s value at about 7 trillion won ($6.4 trillion) after merger with Kakao M. Kakao Page internally estimates its worth to 5 trillion won. Kakao M’s worth is estimated at around 1.7 trillion won upon winning Hong Kong-based private equity fund Anchor Equity Partners as its second largest stakeholder in March 2019.

Kakao Page raked in 30.6 billion won in operating income on a consolidated basis in 2019 on revenue of 257.0 billion won. Combined with Kakao M, their total operating income would jump to 50 billion won and revenue 610 billion won.

Kakao’s move to combine Kakao Page and Kakao M is also seen as an action against Google’s new policy for its app market place users. The global tech giant will be taking a 30 percent fee on all in-app purchases made within Google Play store from October next year, which would inevitably hurt Kakao M’s bottom line.

By Kang Doo-soon, Oh Dae-seok, Kang Woo-seok, Kang Young-woon, and Cho Jeehyun

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