Kakao Entertainment And Melon Company Announce Merger In September

Kakao Entertainment and Melon Company have announced a merger this fall.

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.

Melon, which was spun off from Kakao on July 1, will join Kakao Entertainment in the form of a CIC (company-in-company) in September. 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.

The merger ratio between Kakao Entertainment and Melon is 1:7.8367918, meaning that for each common share of Melon, 7.836791 common shares of Kakao Entertainment will be allocated.

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.

This merger between Kakao Entertainment and Melon is intended to secure global competitiveness and leadership in the entertainment industry. Kakao Entertainment is expected to see annual sales of 2 trillion won (about $1.75 billion) through its merger with Melon, which has been established as a top-tier domestic digital music platform since it began operations in 2004. Melon currently has over 33 million general members and over 5 million paid members. Melon has also hosted the Melon Music Awards since 2009, a major element of the annual K-pop award show scene, and operates various artist-driven audio content like “Big Hit Music Record,” “SMing,” and more.

Kakao Entertainment is a global entertainment company that plans and produces content ranging from original story IP (intellectual property) such as webtoons and web novels to music, drama, movies, digital content, and live performances. It owns over 8,500 IP such as “Itaewon Class,” “What’s Wrong With Secretary Kim,” “The Uncanny Counter,” and “Navillera,” all of which have been made into hit dramas. Under Kakao Entertainment are six movie and drama production companies, including its own production studio, KakaoTV, as well as Logos Film and Baram Pictures. Kakao is also affiliated with six management companies, including BH Entertainment and Management SOOP, and four labels, including Starship Entertainment.

Kakao Entertainment is also expanding into the North American content market by acquiring Tapas and Radish, U.S.-based companies specializing in web novels and webtoons. It also aims to expand its global base in mainland China, ASEAN (the Association of Southeast Asian Nations), Europe, and India in the second half of this year.

Lee Jae Wook, the new CEO of Melon, served as Kakao M’s CEO and Kakao’s Chief Music Officer before Kakao M merged into Kakao Entertainment. Kakao Entertainment CEOs Kim Sung Soo and Lee Jin Soo will support Lee Jae Wook as the merger strengthens Kakao Entertainment’s abilities to control the entire planning and production process of entertainment content, as well as strengthen the interactions between different content platforms like Melon (music) and original content (webtoons, etc.).

Kakao Entertainment stated, “Starting with the merger of Kakao Page and Kakao M and now with the merger with Melon, our process itself is ‘innovation.’ This is only our beginning, and we will build a strong entertainment business value chain and show global growth to become a true world-class leading company.”

Melon stated, “We expect that Melon, which has maintained its No. 1 position since we launched the service, will experience a quantum jump through our strong connection to Kakao Entertainment. We will continue to lead the development of the domestic music industry and grow into a global entertainment company.”

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