Instant messaging app owner Kakao Corp has bought control of South Korea’s top music streaming service in a $1.6 billion (£1.1bn) deal.

The company is buying a 76.4% stake in Loen Entertainment, which operates the MelOn streaming service.  Loen also has its own in-house record label, Loen Tree.

The deal is Kakao’s biggest since its 2014 all-stock merger with web search operator Daum and gives the company access to a large streaming userbase, as well as a music library.

According to Seoul-based brokerage Hana Financial Investment, South Korea’s music streaming and download market was worth around $406 million (£281m) last year. The likes of Spotify and Apple Music are yet to launch in the country.

Kakao chief executive Jimmy Rim said: “By combining Kakao’s various platforms and content services and Loen’s leading music content, we expect tremendous synergy that could establish a strong foundation for global expansion.”

“Kakao is trying to draw a pretty big strategic picture, but it’s not clear whether they will be able to successfully monetize,” HDC Asset Management fund manager Park Jung-hoon commented.

Reuters reports that Kakao shares were up 0.6% as investors examined the deal, which Kakaro claims would be funded partly by issuing 754 billion won of new shares to top Loen shareholders Affinity Equity Partners and SK Planet Co Ltd.

[Source : Music Week]