BREAKINGVIEWS-Naver's $10 bln deal offers crypto compass

By Hudson Lockett

HONG KONG, Nov 27 (Reuters Breakingviews) - South Korea’s Naver 035420.KS has agreed to purchase crypto group Dunamu in a $10 billion all-stock deal that will combine one of the country’s most popular digital payment platforms with its largest crypto exchange operator. In a market where one third of the population already invests in digital assets, the move could point the way for global peers already flirting with similar integration.

The deal comes at a moment of high drama for $28 billion Naver, a top domestic player in both web search and payments but which has struggled to find its footing in the AI age. Earlier this year, founder Lee Hae-jin returned to the firm’s board of directors as chair promising to “turn crises into opportunities with new initiatives”. Privately-held Dunamu by contrast has taken the country’s digital assets scene by storm, with its Upbit exchange accounting for over 80% of South Korean crypto trading volumes, Bloomberg reported in March.

Naver, whose shares had jumped more than 10% since local media reported on a potential tie-up in late September, confirmed plans for a share swap between its fintech subsidiary and Dunamu on Wednesday, which values the target at roughly $10 billion. The exchange operator will sit under Naver Financial, whose parent and minority backer Mirae Asset Securities will be diluted following the share swap that will result in Dunamu's chair and co-chair owning the largest stake. In an unusual move, however, the pair have agreed to delegate their voting rights to Naver.

Lee is betting the acquisition will help "secure future growth engines based on digital assets". In the near term, Naver can benefit from allowing its e-wallet users to seamlessly trade on the crypto exchange operated by Dunamu, which last year reported a 22% rise in net profit to 805 billion won ($550 million) on the back of more than 1.7 trillion won in revenue, according to The Chosun Daily. Moreover, Dunamu's blockchain technology could give its new owner an edge over domestic rivals like KakaoPay 377300.KS.

Ultimately, the real draw may be stablecoins which the country's ruling party has thrown its weight behind. In July, in fact, Naver announced it would collaborate with Dunamu to develop one, though no details were provided. A possible scenario would be for Dunamu to mint won-backed tokens, for instance, which can be circulated via Naver's wallet and e-commerce platforms. That would position the pair as an early leader.

Global peers like Robinhood Markets HOOD.O in the U.S. and the SoftBank -owned 9984.T PayPay in Japan are starting to integrate payments with crypto and other digital assets infrastructure. Naver's deal offers a glimpse of what's to come.

Follow Hudson Lockett on Bluesky and X.

CONTEXT NEWS

South Korea's Naver said in an exchange filing dated November 26 that it has agreed to acquire privately-held crypto group Dunamu in an all-stock deal valued at about $10 billion, pending shareholder approvals. Naver’s fintech subsidiary plans to issue 2.54 shares for every one share in the operator of Upbit, South Korea's largest digital asset exchange. The two had previously announced a collaboration on a Korean won stablecoin project in July.