KAKAO AND MELON ANNOUNCE MERGE IN BUSINESS FOR SEPTEMBER 2021

Such a big news from entertainment industry that two power house are going to merge. KAKAO AND MELON ANNOUNCE MERGE IN BUSINESS FOR SEPTEMBER 2021. On July 15, both companies decided on a merger at their respective board meetings. The two companies plan to complete the merger by September 1 after receiving final approval at a general meeting of shareholders on July 30. The streaming service currently boasts 33 million users and around 5 million paying users.

Kakao M took charge of SK Telecom's online music distribution service, MelOn, in 2009. MelOn is currently the most used online music sales site in South Korea. Kakao expects to see some 2 trillion won ($1.75 billion) in annual sales after acquiring the nation’s biggest music platform. The two companies will maximize synergy by eyeing the domestic and international markets, respectively. The two also plan to augment their business portfolio and stand at the forefront of the music industry by providing a wide range of services and content for global users, according to the press release.

The merger ratio between Kakao and Melon is reported to be 1:7.8, which means that for each share of Melon will be allocated with 7.8 shares of Kakao Entertainment. The two companies jointly agreed at a board meeting held Thursday and attended by both sides. The deal is expected to be finalized through a shareholders meeting on Sept. 1.

Melon Company will also be led by a new CEO, Lee Jae Wook. Even after the merger, Kakao Entertainment will continue to be led by Kim Sung Soo and Lee Jin Soo as CEOs. Kakao Entertainment is itself the result of a merger between Kakao Page and Kakao M, the first large-scale merger between Kakao subsidiaries that happened back in March. Within a few months of its creation, Kakao Entertainment is shaking up the entertainment industry again by planning another large-scale merger with Melon just a few months after its own merger.

Melon was established under SK Telecom, the nation‘s largest wireless carrier, in 2004 and was sold to a Hong Kong-based private equity firm in 2013. It was later acquired by Kakao in 2016 and was part of Kakao M until September 2018. Kakao M eventually spun-off from Kakao, but Melon stayed, as the paid service operation helped Kakao’s cash flow.