The purpose of this study is to analyze the case of merger between Kakao and Daum from a financial perspective. Specifically, this study examines the motive for the merger, the merger procedure, and more importantly the merger ratio between two companies. The results are summarized as follows. The main motive for the merger between Kakao and Daum was to create a synergy effect by combining the web-based internet and mobile platforms. With an expectation for the synergy effect, the merger proceeded well. However, the most important issue in the merger was the merger ratio between two companies. According to the Capital Market Act in Korea, the merger value for the listed firm is based on the stock prices in the market while the merger value for the unlisted firm is determined by averaging the relative and fundamental value. As a listed firm, the merger value of Daum was simply determined as 72,910 Won per share whereas the merger value of Kakao was estimated as 113,412 Won per share through a complicated calculation. Therefore, the merger ratio was determined as 1:1.5555137, which means that 1 share of Kakao stock is approximately equivalent to 1.56 share of Daum stock. As a result, the firm value of Kakao was estimated over three times higher than that of Daum. Though the net asset value of Daum was much larger than that of Kakao, the three times higher firm value of Kakao relative to Daum was mainly due to high expectation for future earnings value of Kakao. Such a high earnings value of Kakao was a controversial question in the market. Nevertheless, the increase in stock price of Daum after the merger announcement demonstrates that the merger ratio was not unfavorable to Daum. However, the stock price of the merged firm has considerably dropped since the merger. This drop in stock price reflected that the merged firm could not have the synergy effect up to expectations. In particular, the merged firm failed to achieve the post merger integration. In addition, the merged firm which actively acquired many other firms just after the merger failed to obtain tangible outcomes from the acquisition.