South Korean content company KidariStudio (KRX: 020120) is reportedly in talks to acquire a significant stake in Lezhin Entertainment, a leader in the webtoon market.
According to Korea Economic Daily's Market Insight, KidariStudio is negotiating to acquire a 38.8% stake in the company currently held by Junghyuk Kwon (ex-CTO, 22.5%) and IMM Private Equity (16.3%).
The move follows a history of cooperation between the two companies. In June last year, KidariStudio and Lezhin Entertainment signed a business cooperation agreement focused on global market expansion in June previous year.
As a result, Lezhin's webtoon content will now be published on Delitoon, a France-based subsidiary of KidariStudio, while KidariStudio's content will be delivered to Lezhin's US platform.
Founded in 2012, Lezhin Entertainment has been at the forefront of the webtoon market in South Korea and other countries.
While Naver and Daum initially offered free webtoon content, Lezhin introduced a paid webtoon service to the South Korean market in 2013.
In addition, the company expanded its business to the North American and Japanese markets in 2015, focusing on competing with Naver Webtoon, Daum Webtoon, Kakao Page, and 14 other webtoon platforms in the South Korean market.
Despite facing operating losses since 2017, Lezhin Entertainment has reduced the size of these losses through various business expansions, such as selling IP rights to Korean dramas or movies.
On the other hand, KidariStudio has been actively expanding its webtoon business through mergers and acquisitions.
The company, which started as Elex Computer in 1987 as an authorized reseller of Apple computers, was acquired by Daou Group in 1999.
In 2017, KidariStudio pivoted its business to focus on content, acquiring Bom Comics for KRW 460 million.
With the acquisition of Delitoon SAS in July 2019, KidariStudio expanded its business to the European market, increasing the ratio of webtoon and web novel revenue from 45% to 80% in 2019.
The potential acquisition of Lezhin Entertainment would further strengthen KidariStudio's position in the webtoon market by leveraging Lezhin's platform expertise.
Furthermore, this deal is expected to build on the existing synergy between the two companies since last June.