By Yoon Ja-young
Market analysts positively evaluated the merger of Daum Communications and Kakao.
“Considering the current market caps only, stock prices have the potential to rise by at least 30 percent after the merger,” said Hwang Seung-taek, an analyst at Hana Daetoo Securities.
“When considering the synergy, there could be a further rise,” he added.
Daum, the operator of the country’s second-largest Internet portal, announced the plan to acquire Kakao, the top mobile messenger service, by swapping stocks.
The stock swap ratio will be oneKakao share for 1556 shares of Daum
Regarding the synergy effect from the merger, he said that while Kakao is buying Daum’s infrastructure through the deal, Daum will be acquiring a growth engine.
“Daum can get a growth engine through the Kakao platform, while Kakao can make use of Daum’s resources in pushing for strategic new businesses or aancing into overseas markets,” said the analyst.
He said that in the short term, there could be synergy between aertisements, games and content businesses.
However, he pointed out that Lee Jae-woong, the founder and the main shareholder of Daum, will be losing dominance. Currently, Kim Beom-soo, co-founder of Kakao, has a 29.9 percent stake in Kakao, while K-Cube Holdings, which is fully owned by Kim, has 23. 7 percent stake in Kakao. Hence, his stake in Kakao totals 53. 6 percent. Lee, meanwhile, has13. 9 percent stake in Daum
After the merger, Kim and K-Cube Holdingswill have a 39.8 percent stake, while Lee will have only 34 percent.
“When considering the positive outlook on the growth of the merged company and the growth potential of Kakao, the deal will positively work on the share prices of Daum,” Hwang said.
He suggested 102,000 won as the target price for Daum
Ahn Jae-min, an analyst at Kiwoom Investment amp Securities expected a positive synergetic effect.
“Daum will be having more influence in the Internet portal while mobile service of Kakao will be strengthened to create a synergy effect,” he said.
He said that the value of Daum as an Internet portal, as well as the search services and display aertisement, game business will create such effects with Kakao’s mobile messenger and other mobile services.
The analysts expected that Daum-Kakao may weaken the influence of Naver, the country’s top portal, which has lasted for the past decade.
The trading of Daum stocks was suspended as of Monday, at Friday’s closing price of 78,100 won.
If a review on their merger is completed today as expected, the trading could resume soon.
Naver dipped 399 percent on the stock market Monday, closing at 745,000 won.