Korea's largest mobile messaging service, Kakao Corporation, has agreed to merge with Internet company Daum Communications Corporation.
When the deal is complete, Kakao will have more than 60 percent of the equity in the merged company dubbed "Daum Kakao" and will be valued up to 3.9-billion U.S. dollars
The heads of the two companies expect the deal to create a "synergy effect" as they compete with the country's largest Internet portal, Naver Corporation and its mobile messaging service Line.
Daum CEO Choi Sae-hoon said Kakao's strong competitiveness in the mobile sector combined with Daum's contents will help the company compete in the fast-changing market.
But some analysts are skeptical that the marriage will help the company enter the global market.
"Kakao is seeking ways to enter the global market just like Naver did, through its Line service to survive the competition. With this in mind, Kakao is wasting its time and resources through this merger with Daum, which is a local-market driven company."
The unlisted Kakao, which has more than 130-million users, is estimated to be worth 2.3-billion dollars.
Daum, which is currently listed on the tech-heavy KOSDAQ, is valued at more than one-billion dollars.
Kim Ji-yeon, Arirang News.