Mobile messenger operator Kakao has agreed to acquire a 76.4 percent stake in Loen Entertainment, provider of MelOn, for KRW 1.87 trillion. Loen Entertainment is a Korean music download and streaming platform provider. The acquisition is expected to provide Kakao with key assets to create new content platforms and expand into global markets by using Kakao’s mobile platforms and Loen’s music content.
Kakao expects the synergy from the Loen acquisition to generate new demand in Kakao’s contentbusiness by adding music streaming to its existing portfolio of content services. Loen’s services are expected to see a boost in user engagement, while also presenting new type of music services leveraging Kakao’s powerful mobile platform. Loen plans to continue to expand its music platform with new services including streaming services based on social networks, user database-driven music curation, artist centered online music creation communities, and services that intertwine with other content in Kakao’s multiple platforms.
To secure funds for the acquisition, Kakao will issue KRW 750 billion in new stocks to Star Invest Holdings Limited (an investment vehicle set up by Affinity Equity Partners), Loen’s previous majority shareholder, and others. The rest will be covered via Kakao’s cash holdings, merger and acquisition financing and by inviting outside investments.
