This article was displayed on the ChosunBiz MoneyMove (MM) site at 4:23 p.m. on May 26, 2026.
Kakao sold AXZ, the operator of the portal "Daum," to Upstage and received about 10% equity in Upstage. The parties chose a stock exchange structure in which Kakao disposed of all its equity and received new shares in Upstage. With Upstage recently winning approval for a business combination review, the final transaction has been completed.
According to the investment banking (IB) industry on the 26th, Kakao recently agreed with Upstage on the size of the stock exchange and closed the transaction. Upstage acquired 100% of AXZ's equity, and Kakao received new shares in Upstage in a stock exchange transaction, giving Kakao about a 10% equity stake in Upstage.
This follows Upstage's recent pre-IPO fundraising, in which SK Networks, Sage Partners and Woori Venture Partners valued the company at about 2 trillion won post-money. Based on that, the value of Kakao's 100% equity in AXZ was set at about 200 billion won.
AXZ was established in May last year as a wholly owned subsidiary through a physical spin-off of Kakao's Content CIC. Daum's news, search, cafes and mail are its core services, and Kakao initially set the transfer price for the services at 7 billion won when AXZ was set up. After a revaluation of assets, the transfer price was raised to about 194.4 billion won.
The effective consideration for AXZ was set slightly higher than the Daum service transfer price (about 194.4 billion won) assessed by Kakao. The fact that it was a stock exchange transaction with no cash payment acted as a premium factor. Compared with the 7 billion won transfer price Kakao set in May last year, it jumped about 29 times.
An industry source said, "There was initial talk that Kakao would secure up to about 25% equity, but Upstage's valuation rose sharply as it secured matching investment from the Public Growth Fund," adding, "Upstage received a total of 560 billion won from the Public Growth Fund and others."
Upstage is an AI service development startup founded in 2020 by Kim Seong-hun, who led the artificial intelligence (AI) development organization at Naver. With its in-house large language model (LLM) "Solar," it has focused on the business-to-business (B2B) AI service market in finance, law and manufacturing.
The company plans to accelerate the popularization of AI services by acquiring AXZ, the operator of the portal Daum. It has also set a goal of creating a so-called "AI-native portal" that differentiates itself from Naver and Google by combining the Solar LLM with Daum's search infrastructure and content data such as news and cafes.
The key point to watch is Upstage's initial public offering (IPO). Upstage is said to have suggested a post-listing valuation of up to 5 trillion won at a recent investor relations (IR) session for institutional investors. If it lists at a 5 trillion won valuation, the value of Kakao's roughly 10% equity could rise to about 500 billion won.
An IB industry source said, "Kakao's conversion of portal assets into an AI company equity stake without cash is effectively a transaction designed to achieve both business restructuring and investment returns," adding, "If Upstage succeeds in its IPO, Kakao has set up a structure that could yield a substantial rise in equity value."
Meanwhile, Upstage's acquisition of AXZ also received clearance from the Korea Fair Trade Commission (FTC) for the business combination review. After examining concerns about market dominance and whether other AI companies could use data accumulated by Daum as training data, the FTC reached a final approval decision in the middle of this month.