South Korean internet conglomerate Naver Corp is set to acquire Wattpad, the world’s largest social storytelling platform, in its latest push into the content business.
Naver’s board of directors approved a deal to buy 100% of the Canadian company for about $600 million on January 19. The company said in a regulatory filing on the following day that the objective of the takeover was to “diversify the content business and build a stronger position in the North America market”.
Founded in 2007 by Ivan Yuen and Allen Lau, chief product officer and chief executive officer respectively, Wattpad is the world’s largest online community of writers and readers, with more than 90 million monthly users who spend over 23 billion minutes a month on the platform. Wattpad says approximately 1500 stories written on the platform have been published as books or adapted for film and television.
Wattpad started sounding out investors for a sale in August last year. The auction for the company began in October, with final offers received in December from three bidders, including Naver, according to sources with knowledge of the deal. The other two bidders were reportedly major industry players from the U.S. and China.
The founders of the Toronto-based company focused on Naver’s strength in the digital cartoon, or webtoon, business – which the competing bidders lack – and viewed this as a future driver of growth for the company, while reinforcing its position as a prominent storytelling platform in the long term, sources said.
Since its foundation, the storytelling app has raised about $117 million from investors around the world. Its main shareholders include Tencent, The Raine Group, August Capital, Khosla Ventures, OMERS Ventures and Golden Venture. The two founders each hold stakes of about 10% in the company.
Wattpad’s shareholders will be paid in cash or shares. The final acquisition cost could rise to $645 million, depending on the mix of cash and shares payments, due to a higher price per share being paid for a share exchange.
Subject to regulatory approvals, the deal is expected to be completed in the first half of the year. Yuen and Lau will continue to lead the company and work with Naver on the post-merger integration. (Reporting by Hee-yeon Han)