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Naver, CJ sign share-swap deal in strategic tie-up

Naver`s headquarters in Pangyo, Gyeonggi Province (Yonhap)
Naver`s headquarters in Pangyo, Gyeonggi Province (Yonhap)

South Korea's top online portal operator Naver and entertainment and logistics giant CJ Group signed a share-swap deal Monday in a strategic tie-up to boost their competitive edge in the e-commerce and entertainment industries, officials said.

Under the deal worth 600 billion won ($531 million), Naver will acquire a 7.85 percent stake in CJ Logistics Corp., a parcel delivery company, a 5 percent stake in entertainment giant CJ ENM Corp. and a 6.26 percent stake in Studio Dragon, a drama production company owned by CJ ENM.

In return, Naver plans to provide stakes with the same monetary value to the three CJ units. The stakes in Naver to be held by CJ Logistics, CJ ENM and Studio Dragon are 0.64 percent, 0.32 percent and 0.32 percent, respectively.

The share swaps between Naver and CJ Logistics and CJ ENM are set to take place on Tuesday, while one involving Studio Dragon is expected to take about two weeks, the companies said.

The move is meant to set up a new cooperative model in content and e-commerce markets and strengthen their competitive edge against the influx of foreign rivals, such as US streaming giant Netflix Inc.

As of May, Netflix held the most active mobile application users among over-the-top (OTT) services in South Korea at an estimated 6.37 million in a country with a population of 51 million, according to market researcher Nielsen KoreanClick, far higher than local player Wavve at 3.46 million and Seezn at 2.36 million.

Naver said it plans to unveil globally competitive content in cooperation with CJ ENM, the production house behind Oscar-winning "Parasite," and Studio Dragon, which created the popular drama "Guardian: The Lonely and Great God."

Naver said they will invest 300 billion won over the next three years to produce content for global audiences amid the growing popularity of "hallyu," the Korean wave of pop culture.

K-pop and the broader Korean Wave have resonated with young people around the world, burnishing South Korea's image as a cool country, home to K-pop phenomenon BTS and "Gangnam Style," South Korean rapper Psy's 2012 mega-hit song.

A CJ official said the cooperation between CJ and Naver could further expand Korean content in global markets, citing CJ's capacity to create and produce top-notch content and Naver's original content in webtoon and webnovel.

Line Webtoon, the webcomic arm of Naver, saw the number of its monthly active users surpass 67 million globally in August.

Naver Webtoon, more commonly known as Line Webtoon in the United States, is home to a plethora of creator-owned content, ranging from romance to fantasy.

Naver also plans to acquire a stake in tving, a subscription-based video-on-demand service that was recently spun off from CJ ENM in a move to strengthen competitiveness against Netflix.

Also, Naver and CJ Logistics plan to expand fulfillment services for e-commerce and jointly invest in logistics infrastructure, officials said. (Yonhap)

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