Kakao webtoon company to merge with entertainment arm

Logos of major affiliates of Kakao, KakaoPage and Kakao M [KAKAO PAGE]

Two major affiliates of Kakao will merge to create an entertainment company.

KakaoPage, which manages a webtoon and digital novel platform, said Monday it will merge with Kakao's entertainment company Kakao M.

The new company will be called Kakao Entertainment.

The decision was made during a board meeting on Monday, with the new entity aimed to launch on March 1. Shareholders are to meet Tuesday to vote on the move.

The swap ratio will be 1 to 1.31, meaning that every KakaoPage common stock will be swapped for 1.31 shares of Kakao M.

KakaoPage estimated the merger will contribute in generating 1 trillion won ($907 million) in annual revenue.

According to Kakao, the aim is to expand globally.

KakaoPage owns thousands of webtoons and novels, currently available in 10 countries, both in Asia and North America.

In total, the company owns 8,500 separate pieces of intellectual property, which also include some TV dramas, movies and games.

Kakao M owns seven actor management agencies, four music labels and film and TV production companies.

Content based on Kakao content has proven successful.

"Itaewon Class," a webtoon-based television series that aired on JTBC last year, was the second-most popular show watched on Japan's Netflix last year. "The Uncanny Counter," which is also based on a webtoon, was the highest-viewed show among those aired on OCN.

Kakao M also operates popular music service Melon.

Kakao owns 63.44 percent of KakaoPage, which in turn owns 77.31 percent of Kakao M.

Kakao's share has been rising since news of the merger first broke in early December. Kakao's stock on Dec. 1 was valued at 374,500 won. As of Monday, it had risen to 473,500 won. It was up 2.27 percent compared to the previous trading day.

BY LEE JEE-YOUNG [lee.jeeyoung1@joongang.co.kr]