Acquired 1 trillion unicorn zigzag instead of Kakao eBay

Kakao will acquire ZigZag, the number one women’s clothing platform.

According to the investment bank (IB) and IT industry on the 8th, Kakao is expected to become the largest shareholder of’ZigZag’ (corporation name Croqui.com), the number one women’s clothing online shopping mall in Korea. Kakao devised a transaction structure in which Kakao headquarters establishes a new subsidiary and merges the company with ZigZag. As early as this week, the remaining negotiations will be finalized and an intra-week contract will be signed as early as possible.

In Kakao, the project was named Kakao Z after Zigzag. When the transaction is closed, Kakao will become the largest shareholder. The corporate value of Zigzag, which was recognized during the merger process, is said to be close to 1 trillion won.

Venture investors (VCs) such as Altos Ventures and Stonebridge Capital are also planning to receive new Kakao shares or convert them into cash according to their share ratio. In particular, Altos Ventures is facing a’big hit’ with an initial investment of 3 billion won in 2016, right after the company was established. It is known that other key personnel other than the existing founder, CEO Jeong-hoon Seo, will lead the company’s management instead of cashing.

ZigZag is a fashion platform founded in 2015 by CEO Jeong-hoon Seo, a former developer. We devised a service that allows users to set categories to their liking, and to view products owned by more than 4000 companies (Soho) that have entered the platform according to the conditions. In particular, it is known that it has secured a fan base among teenagers and 20s. Internally, it is evaluated that the synergy with Kakao, which has been troubled by the decrease in the number of inflows of the age group, is also clear.

Since its establishment in 2016, it has steadily increased its transaction amount to 200 billion won (2016), 350 billion won (2017), 500 billion won (2018), and 600 billion won (2019). In 2020, GMV will reach 750 billion won. Considering that the ransom of Musinsa, whose transaction amount is 1 trillion to 1.5 trillion won, was valued at more than 3 trillion won, it has been consistently selected as the next unicorn (unlisted company with an enterprise value of 1 trillion won or more).

Kakao, who has been contemplating expanding its’commerce’ capabilities such as gifting and shopping, is also evaluated as an optimal transaction. Until now, in the shopping business such as Kakao Commerce, the issue of increasing the variety of items compared to competitors has been deeply concerned. We also reviewed the acquisition of eBay Korea, which could significantly increase the number of stores right now, but we turned to a strategy that could make the service more individualistic than the amount. Internally, Kakao thought about merging with Musinsa with a similar structure at one time, but as Musinsa’s corporate value rapidly increased, it turned to zigzag.

Another factor to watch is that Shinsegae Group’s Sup.com has recently acquired the W concept, a women’s shopping mall, and the cross-platform cross-platform is in all directions. Even after the ZigZag acquisition, it is expected to additionally jump into the acquisition of a platform that can secure synergy.

In terms of’financing’ that Kakao has unfolded in all directions, it is evaluated that it is the best choice. Kakao has increased its corporate value to tens of trillion won by dividing core businesses such as Kakao Bank, Kakao Mobility, Kakao M, and Kakao Commerce into subsidiaries, and then by attracting external investments or listing them. Kakao is said to have won the agreement of the CEO by proposing a method to guarantee independent management as a subsidiary of Kakao instead of merging ZigZag into Kakao Commerce.

Joonho Cha / Reporter Minki Koo [email protected]

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