Wattpad is set to be acquired by South Korean internet company Naver Corp. for an estimated $754 million CAD ($600 million USD).
Naver announced the deal early before market open Wednesday morning local time in South Korea. Wattpad confirmed the deal to BetaKit Tuesday evening. The transaction includes cash and 248,543,779 in stock shares in exchange for KRW 652.5 billion.
“Both Wattpad and WEBTOON…represent world-leading collections of inspired, imaginative storytelling IP.”
Naver company is the country’s largest online search engine and operates a mobile messaging app, as well as other internet properties.
Wattpad stated the acquisition will allow it to continue operating in Canada under the leadership of its co-founders Allen Lau and Ivan Yuen. The company added that the deal would also allow it to continue with its international growth.
Speaking with BetaKit, Lau confirmed Wattpad will continue to operate independently and only plans to accelerate its current trajectory.
“I’m not done yet. What I would say is, today is the last episode of season one, but tomorrow is the more amazing first episode of season two,” the CEO said. “It will only be better and I’m so looking forward to growing the company at an accelerated pace.”
Founded in 2006 by Lau and Yuen, Wattpad’s online self-publishing platforms act as a community for readers and writers. In recent years, the Toronto-based company has turned into a media studio, penning production deals that have seen stories on its platform become books, movies, podcasts and television series on a global level.
The company launched Wattpad Studios, its film and television production arm, which brought more than 70 television and film projects into development around the world last year alone. Wattpad Books was also launched in 2019 as the company’s personal publishing arm. Wattpad also operates Wattpad Brand Partnerships, which works with brands to connect them with Gen Z consumers.
Touting itself as the world’s leading social storytelling platform, Wattpad counts more than 90 million monthly users, who spend more than 23 billion minutes engaged in original stories. This cache of original stories has led to Wattpad being an abundant source of intellectual property to an entertainment industry that is increasingly searching for fresh, but proven, content. CEO Lau had previously expressed dreams of Wattpad becoming the next Disney.
Amid the COVID-19 pandemic, Wattpad had a busy year. In May, the company launched the Wattpad Development Fund, which uses data-backed insights to discover stories and trends from its platform that can be adapted into new formats such as TV and film. Wattpad also entered the podcasting space to bring a select story, which was originally written for a contest, to new audiences. Levitz told BetaKit last in November that Wattpad was close to reaching one billion uploads to its platform.
“In a world where we are stuck in a huge amount of reboots and prequels and sequels and pre-sequels, the fact that we can bring new IP and new voices to bear is something that I think every content producer and exhibitor is looking for,” Aron Levitz, head of Wattpad Studios, told BetaKit last year.
Part of Naver’s endeavours includes WEBTOON, a global digital comics platform, where, similarly to Wattpad, it works with production companies to create content. The purchase would align WEBTOON and Wattpad, and combine the Canadian company’s more than 90 million user base with WEBTOON’s 72 million monthly active users.
“Wattpad joining WEBTOON under the Naver umbrella is a big step towards us becoming a leading global multimedia entertainment company,” said WEBTOON founder and CEO Jun Koo Kim. “Both Wattpad and WEBTOON care most about helping creators tell their story their way, and both represent world-leading collections of inspired, imaginative storytelling IP.”
It was first reported by The Globe and Mail at the beginning of the month that Wattpad was in talks with “multiple parties” about a potential sale for upward of $500 million USD.
Lau had reportedly invited potential bidders after receiving an unsolicited takeover offer from a United States “internet company.”
“When we started Wattpad in 2006, we understood that technology would democratize storytelling and that stories are the atomic unit of every type of entertainment,” said Lau following the announcement of the deal with Naver. “In 2021, when every form of entertainment is being transformed, we’ve built a platform that can fuel hits on screen and bookshelves, empowering and rewarding a new generation of diverse creators all over the world. Today’s news is about continuing Wattpad’s journey and taking our business to the next level. We’re thrilled about the prospect of joining the amazing teams at Naver and WEBTOON to continue our growth, help more writers make money, and bring new voices to screens and bookstores everywhere.”
The acquisition is expected to close in the second quarter of 2021, and remains subject to regulatory approvals and other customary closing conditions.
After bootstrapping Wattpad for more than three years, the company raised its first round of seed funding in 2009. In 2018, the company pulled in $51 million USD in a venture funding round that put its valuation just under $398 million. To date, Wattpad has raised more than $117 million.
Its investors include Tencent Holdings Limited, a leading provider of internet services in China, BDC, OMERS Ventures, Golden Venture Partners, Khosla Ventures, and Northleaf Venture Catalyst Fund, among others.
“Canadian tech has been a bright spot in an otherwise difficult past twelve months,” OMERS Ventures managing partner Damien Steel said in a statement to BetaKit. “Outcomes like this help feed an ecosystem and have lasting positive impact. I have never felt more optimistic about the Canadian tech ecosystem and think the positive news is just beginning.”