K-Pop Streamer Loen Jumps as Kakao to Buy $1.5 Billion Stakeby
Acquisition will complement South Korea's top messaging app
Company has been adding features to its Kakao Talk service
Loen Entertainment Inc., the Korean operator of the Spotify-like MelOn music service, rose in Seoul trading after the company attracted a 1.87 trillion won ($1.5 billion) takeover offer from top messaging service Kakao Corp.
The stock, which surged as much as 27 percent, ended the day at 82,900 won, up 5.5 percent. Kakao said on Monday it’s offering to buy 19.3 million shares, or a 76 percent stake, for 97,000 won apiece. That’s 23 percent above what Loen closed at last week and 17 percent higher than Monday’s finish.
For Kakao, the purchase of the K-Pop streaming service would build on the company’s plans to add services on its messaging app, which is nearly ubiquitous in Korea. Last year, the company started its Kakao Taxi service, which has already marginalized Uber Technologies Inc. in the country.
Under the offer, Kakao will buy a 61 percent stake from Star Invest Holdings Ltd. and 15 percent from SK Planet Co., according to the statement. To help fund the purchase, Kakao will issue and sell 6.9 million new shares of itself, according to the filing.
Kakao shares fell 0.4 percent to 114,700 won, while the Kosdaq index dropped 1.1 percent.