Daum and Kakao Corp. said Monday the planned merger between the search portal and mobile messenger will help the new company called “Daum Kakao” to make headway in globalizing its services.

Neither drew a clearer road map for competing with overseas IT giants as their top priority is consolidating the two companies by October this year. Daum will be the surviving entity, and Kakao will dissolve in the process, they said.

“We will continue to discuss all other details as the two companies merge,” Daum CEO Choi Sae-hoon told the press on Monday.

“We tend to generate synergy by turning our weaknesses into strengths for overseas expansion.”

He added that Daum had the human resources and the capability in media content platform operations, while Kakao’s strength lay in being an innovator in mobile communication.

Daum and Kakao said the new merged entity, in which Kakao founder Kim Beom-su will become the biggest shareholder, will seek to become a “fast global communication platform through which consumers can get their daily information, such as finance, retail shopping and games.”

Kakao’s co-CEO Lee Sir-goo said that they would inevitably face challenges in going global, although the mobile messaging service has many overseas users.

“We’ve still got a long way to go, and will need to further discuss global matters as we proceed with the merger,” said Lee.

The two companies, however, said that Daum Kakao will be run by two chief executives, while a majority of its board seats will be taken up by Kakao executives, including founder Kim and co-CEO Lee Jae-beom.

Kim’s shares in the new company will increase to about 50 percent after taking Kim’s K Cube’s ownership in Kakao into account, according to Kakao. Daum founder Lee Jae-woong will no longer remain a “big stakeholder.”

The mobile messaging service said Tencent, China’s largest Web portal and Kakao’s second-biggest investor, approved the merger deal with Daum, which is likely to see its value increase and put it in the No. 2 rank on the tech-heavy KOSDAQ after the consolidation.

“The merged company will become No. 2, but we are aiming to become the most valued tech company on the KOSDAQ,” said Daum CEO Choi. 

Analysts were positive about the deal.

“Kakao will benefit from Daum’s online business expertise in terms of planning, distribution, advertising and human resources. Daum will also have a new growth engine in mobile business,” said Hwang Seung-teak, an analyst at Hana Daetoo Securities.

By Park Hyong-ki and Shin Ji-hye 
(hkp@heraldcorp.com) (shinjh@heraldcorp.com)