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Business tie-ups

Naver, CJ ink $531 mn deal on entertainment content, logistics

Oct 27, 2020 (Gmt+09:00)

South Korea’s largest internet portal Naver Corp. and logistics and entertainment conglomerate CJ Group have signed a 600 billion won ($531 million) share-swap deal in a strategic tie-up to create synergy in their entertainment content and logistics businesses.

Under the deal signed on Oct. 26, Naver will acquire a 7.85% stake in CJ Logistics Corp, 4.99% of CJ ENM Co. and 6.26% of Studio Dragon Corp., the drama producing arm of CJ Group. In return, CJ will take over 1.24% of Naver worth 600 billion won.

After the share swap, Nave will become the third-largest shareholder of CJ Logistics and CJ ENM and the second-largest stakeholder of Studio Dragon.

The two sides have also agreed to jointly invest 300 billion won in content creation over the next three years.

Naver CEO Han Seong-sook, left, and CJ's chief business strategy officer  Choi Eun-seok sign a strategic partnership deal Oct. 26

“We aim to provide our clients with new experiences and convenience though the alliance with CJ, which has strengths both in entertainment and logistics,” Naver Chief Executive Han Seong-sook said after inking the deal with Choi Eun-seok, CJ’s chief business strategy officer.

WIN-WIN FOR BOTH

Analysts expect the partnership to create synergy by harnessing the other’s strengths.

Naver, which already has significant presence in the US and Japan’s webtoon market and wields influence in Southeast Asia through its mobile messenger app Line, will be able to use CJ’s entertainment production capability to film its content.

CJ’s Studio Dragon is already well-known globally with its popular Korean dramas such as Mr. Sunshine, It’s OK to Not Be Okay, and Crash Landing on You.

Mr. Sunshine, a popular Korean drama produced by Studio Dragon

Industry officials said CJ could produce Naver’s popular webtoons and distribute them via global over-the-top (OTT) content distributors such as Netflix Inc.

Korean dramas have enjoyed global popularity for years on the back of the Korean wave, or hallyu, most recently riding high on acclaim for the Oscar-winning film Parasite and K-pop boyband sensation BTS.

CJ, in turn, can benefit from its relationship with Line Corp., which runs one of Asia’s most popular chat apps with its 164 million monthly active users (MAU), to widen its own client base globally.

The partnership is also expected to combine Naver’s online shopping platform and CJ’s distribution network.

CJ Logistics, Korea’s leading logistics firm, will be able to secure a customer base of tens of thousands of online sellers using the Naver platform. CJ Logistics established Asia’s largest distribution center in Gyeonggi Province in 2018.

PREVIOUS DEALS

Naver’s business tie-up with CJ follows a similar share-swap deal worth 500 billion won with Mirae Asset Daewoo Co. in 2017. Last year, the web portal company entered the financial market by launching Naver Financial Corp. with the help of Mirae Asset.

In efforts to secure hallyu content, Naver has also invested 100 billion won each in Korea’s two leading entertainment firms, YG Entertainment and SM Entertainment.

Write to Joo-Wan Kim and Bo-Ra Kim at kjwan@hankyung.com

In-Soo Nam edited this article.

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