[Click eStock] "CJ ENM·SK Square Invest 250 Billion Won in Wavve... Merger Becomes Visible"

Resolving Wave's Maturing Debt Through Capital Injection
Increased Possibility of Collaboration and Integration Between TVING and Wave
Strategic Investment Expected to Accelerate Cooperation Between the Two Platforms

On the 28th, Samsung Securities analyzed that the merger of CJ ENM has become visible with a capital injection of 250 billion KRW together with SK Square. They maintained a 'Buy' investment opinion and a target price of 91,000 KRW. The previous closing price of CJ ENM was 63,400 KRW.

According to Samsung Securities, the two companies will inject 250 billion KRW into Wave, a domestic OTT platform under SK Square. On the 27th, Wave issued convertible bonds (CB) to SK Square (150 billion KRW) and CJ ENM (100 billion KRW). This funding will mainly be used to repay convertible bonds issued in 2019. The maturity repayment amount is approximately 241 billion KRW, and this funding will resolve the maturity debt.

Researchers Minha Choi and Younghoon Kang of Samsung Securities stated, "CJ ENM's investment this time is interpreted as a signal that strengthens the possibility of cooperation and integration between TVING and Wave, beyond simple financial support," adding, "CJ ENM has formalized this investment as a 'strategic investment for business partnership,' and it is expected that the phased cooperation between TVING and Wave will begin in earnest."

TVING, under CJ ENM, recently expanded its presence by recording 8.1 million monthly active users (MAU) as of October, based on KBO broadcasts and popular content. If the content and subscriber bases of the two companies are integrated, competitiveness in the domestic OTT market is expected to be significantly strengthened. Although TVING and Wave recorded operating losses of 142 billion KRW and 80.4 billion KRW respectively last year, TVING showed improvement by reducing its loss to 7.1 billion KRW in the third quarter of this year.

Researchers Minha Choi and Younghoon Kang said, "If the merger of the two companies is successful, the combination of TVING's popular content and Wave's terrestrial broadcast content is expected to further strengthen their position in the OTT market," adding, "As discussions on OTT market integration progress, attention is focused on whether Wave's current investment will lead to accelerated cooperation between the two platforms."