AXZ, the operator of the portal Daum, is seeking growth opportunities through cooperation with AI technology company Upstage.

On Jan. 29, Kakao, the parent of AXZ, and Upstage each held board meetings and approved signing a memorandum of understanding for a share-swap transaction. The core of the deal is that Kakao will transfer its AXZ stake to Upstage, while Kakao will acquire a stake in Upstage. AXZ is currently a wholly owned subsidiary of Kakao.

Since being spun off from Kakao in May last year, AXZ has focused on strengthening its fundamentals through faster decision-making and management efficiency. It is also working to upgrade its business model, including launching new services, and to find new growth engines to respond to the rapidly changing AI industry environment.

Upstage, which has been looking for opportunities to expand its business based on its large language model Solar, proposed cooperation with AXZ, which has a broad user base and rich content data. The two companies reached the agreement based on their conviction about the need to develop new AI-based services and create synergy.

If the transaction is finalised after full due diligence following the MOU, Upstage plans to further advance its AI capabilities based on Daum’s vast content data and build a next-generation AI platform by combining its LLM Solar with Daum services. The two companies also expect the business combination to create synergy for Upstage’s project for a "proprietary AI foundation model" to expand an AI ecosystem for all citizens nationwide.

Upstage CEO Sung-hoon Kim (김성훈) said that if Upstage’s AI technology combines with Daum, which has a nationwide user base, it would create an environment where more users can use AI easily and naturally.

AXZ CEO Ju-il Yang (양주일) also predicted that the synergy between the two companies would allow them to roll out new AI services at speed.