It will be called DaumKakao.
And the new company will keep Korea's number one web portal Naver on its toes, according to industry insiders.
Daum Communications and Kakao on Monday announced merger with a share-swap ratio of two to three.
That means every two shares of Daum will be equivalent to three shares of Kakao Talk.
Daum was founded in 1995 and was the biggest and most popular web portal at the time in Korea.
But with the rise of Naver in the early 2000s, it started to lose ground in the market.
Daum, which is currently listed on the tech-heavy KOSDAQ, is valued at more than one trillion won, or one billion U.S. dollars while the unlisted Kakao is estimated to be worth 2.3 billion dollars.
Kakao Talk is used by virtually every smartphone user in Korea.
The words the heads of the two companies used were "creating synergy effects" when describing the merger.
Daum's backlog of data will be beneficial to Kakao, while Kakao's mobile platform will help Daum expand into overseas markets.
But industry watchers are interpreting this as "uniting against Naver."
Naver, which is listed on the benchmark KOSPI, has a market capitalization of 25 billion dollars.
Laah Hyun-kyung, Arirang News.