Kakao Entertainment, part of South Korean internet giant Kakao Corp., is poised to buy leading Korean film production company Zip Cinema from its Singaporean owner Spackman Entertainment. The deal is valued at S$19.8 million ($14.8 million).
Zip Cinema is producer of “Broker,” the Korean-language debut of Japanese Palme d’or winner Kore-eda Hirokazu (“Shoplifters”), which is now in post-production and being sold by CJ Entertainment. The film stars Song Kang-ho (“Parasite,” “Snowpiercer,” “Memories of Murder”), Gang Dong-won (“Peninsula”) and Bae Doona (“The Host,” “Cloud Atlas” and Netflix series “Kingdom”).
The company previously produced hit films including 2014’s “My Brilliant Life,” 2015’s “The Priests” and 2018’s “Golden Slumber.” It was also a minority investor in Bong Joon-ho’s original “Snowpiercer” film from 2013.
Spackman, which is listed on the Singapore Stock Exchange, revealed in July that it had received an approach for Zip Cinema from an unidentified bidder. Spackman says that the disposal to Kakao Entertainment will transform its finances as the sale proceeds are nearly three times Spackman’s S$7.6 million ($5.67 million) market capitalization. Spackman shares soared by as much as 50% following the deal announcement.
The deal is puny compared with the KRW55 trillion ($46.9 billion) valuation of Kakao Entertainment’s parent company Kakao Corp., but it is nevertheless seen as synergistic. “KEC already has diverse video production capacities, and the planned acquisition of Zip Cinema is expected to add to and synergize with this existing value chain,” a Kakao Entertainment spokesman told Variety.
Kakao Entertainment came into being in January this year when Kakao Page, known for its webtoons, and Kakao M (film and TV production, talent management and record labels) were merged. It was further expanded from the beginning of this month when the Melon music streaming unit was also folded in.
Spackman has assembled a collection of Korean assets and Korean-themed businesses. In 2014, it acquired producers Korea Take in 2017 and Simplex in 2019. It says it will continue to invest in Korean films and diversify into Hollywood.
“Other than producing and investing in Korean films directly, the company will also tap on its subsidiaries, including Take Pictures, Simplex Films, Greenlight Content and Novus Mediacorp to produce and invest in Korean films,” Spackman said in a regulatory filing.
“Against the backdrop of uncertainty of the entertainment sector brought about by the COVID-19 pandemic, particularly in relation to the theatrical film industry, the proposed disposal will provide the Group with working capital for business diversification and to expand into other businesses, in particular, co-producing and financing U.S. films which are potentially more profitable than Korean films due to a wider international audience base. The group’s pipeline of U.S. Hollywood projects include four potential new films, which will be announced once definitive agreements have been signed for these projects, as and when necessary.”