Daum to merge with Kakao

Daum Communications, the second-largest Internet portal company in South Korea, said Monday that it will merger with Kakao, the country's top mobile messenger service provider, through a stock swap.

The merger and acquisition deal will create an information technology (IT) giant with market capitalization of 3.4 trillion won.

The merger, if finalized, is expected to change the landscape of the nation's portal and mobile social network market that has been dominated by Naver. Naver has controlled about 70 percent of the portal market.

The board of directors at both companies approved the merger plan on Friday. However, the deal is subject to final approval by a meeting of shareholders to be convened in August.

The swap ratio has been set at one Daum share for 1.556 shares of Kakao, company officials said.

AJP