SEOUL, KOREA - The market capitalization of Daum Communications is rising fast following an announcement that it would merge with Kakao Inc. two days ago. Even though the actual merger has not been officially launched, Daum's share price hit the 15-percent upper-bound daily limit for two consecutive days, with its market cap ranking brought up to eighth place from 11th.

 

Given the one-day trading suspension due to the merger announcement on the 26th, the market value increase for just two trading days has been 340 billion won. At 9:13 am on the 28th, the shares of Daum were traded at 103,200 won, up 14.92 percent from the previous day's closing price of 89,800 won. This is the first time for Daum's share price to surpass the 100,000-won level since February last year.

 

A Daum official said on the 26th the company would strengthen its core business areas after the union with Kakao and create synergies. The merger ratio will be 1.556 shares of Kakao for one Daum share. The official merger day has been set on October 1.

 

The market value of Kakao, even though a non-public company right now, is estimated at 2.35 trillion won, based on the price sold and bought in the over-the-counter market. Once a new company emerges from the marriage of the two info-tech giants, it will be the second-largest company in the KOSDAQ market after Celltrion, with a market cap of about 3.5 trillion won.