KT Corp. said Monday that it has bought Enswers Inc., a Seoul-based video search technology provider, for 45 billion won ($40 million) to shore up its cloud computing business.
The acquisition, one of the largest deals in South Korea’s technology startup history, will help the company release a new multimedia service for purchasing, storing, managing and browsing online video content, KT said in a statement.
KT, South Korea’s dominant fixed-line operator and No. 2 mobile carrier, has been seeking to expand its cloud computing operations as one of its new revenue sources to counter slowing growth in the telecom business.
Enswers, which operates a video search engine called Enswer.me and Soompi, a Korean entertainment news portal, will provide technologies that allow users to search multimedia content and index videos.
The four-year-old startup will operate as a subsidiary of KT moving forward, retaining the current management team.
“KT’s acquisition will help us drive continued development in the multimedia search technology sector and we will work together to introduce a new line-up of online video services and platforms,” Kim Kil-youn, Enswers’ chief executive said in a statement.
The two companies said that the deal was unusual in South Korea not only in its size but also in KT’s approach to valuations.
Mergers and acquisitions by big conglomerates are rare in South Korean industry where big industrial groups often seek organic growth rather than acquiring small firms.
“In the due diligence process, KT adopted a progressive approach focusing more on the potential business opportunities, the value of core technology and the quality of human resources rather than our current businesses,” the Enswers CEO said.
“This approach is commonly found in the Silicon Valley, but rarely seen in Korea.”
Enswers posted at least 3 billion won in annual revenue last year and has 64 employees on its payroll.
KT posted a 256 billion won net profit in the July-September quarter, down 41 percent from one year ago. Its sales amounted to 4.99 trillion won in the same period.