Kakao have announced the decision to acquire 76.4% shares in Loen Entertainment, a company that is known to have pioneered the digital music service market in Korea through Melon for US$1.6b (KRW 1.9t). Melon is the top music streaming service in Korean. Through this acquisition, Kakao plans to combine Loen's music contents with their mobile platform and secure a new market by allowing content developers to be more competitive.
In securing the investments funds, Kakao have raised US$648m (KRW 750t) through Loen's major shareholder, Star Investment Holding. The remaining capital will be raised independently by Kakao through company cash and assets. If required Kakao will seek capital raising ousitde the Loen connection.
Kakao's 'Hanaro' content platform has been popular in the mobile generation from which they strengthened their mobile content platform, ‘1boon’ (Korean for 1 minute). The acquisition will also strengthen the video contents services Daum TV and Kakao TV. Recently, the Kakao page provided access to Euro contents which was made possible after acquiring Podotree.
Lim Ji Hoon from Kakao commented, “In the mobile generation, music content is the most beloved content which influences lifestyles and is powerful enough to affect global cultures. The combination of Kakao mobile platform and Loen contents create huge synergies that can open the path for global market”.
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