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Naver is expected to make a 142 billion won gain on paper on a pre-tax basis as it used treasury shares to pay $600 million, equivalent to 684.8 billion won, to acquire Canada-based storytelling platform Wattpad.

The South Korean internet giant completed its acquisition of Wattpad on Monday in a deal consisting of 74% cash and 26% stock, the company said in a filing. Naver paid 507.9 billion won in cash and the remaining 176.9 billion won in treasury shares.

Naver’s decision to use treasury shares for the Wattpad deal was to save cash for further investments. The company has plenty of cash, with its cash and cash equivalents standing at 2.8 trillion won at the end of 2020 on a consolidated basis. It has also raised a total of $800 million from foreign bond investors in recent months.

The deal is also expected to give the internet company a significant gain on paper. According to the filing, Naver provided 488,757 shares to Wattpad at Monday’s closing price of 362,000 won per share, which was several times higher than the original cost.

Naver has been buying back shares steadily since 2005, when they traded at 270,000 won, or about 54,000 won adjusted for a five-for-one stock split in 2018. Treasury shares accounted for 6.5% of the company’s total issued shares at the end of 2009, with the proportion rising to 9.6% in 2013 and 10% in 2020.

Naver said in its latest annual report that the original cost of some 21 million shares provided to three CJ affiliates last year in a share-swap deal was 151.4 billion won, or 72,288 won per share on average. If the same average price is applied to the Wattpad deal, the original cost would be 35.3 billion won, giving Naver a 141.6 billion won gain on paper on a pre-tax basis.

After the takeover of Wattpad, Naver’s monthly users increased to 166 million, including 72 million from Naver Webtoon and 94 million from Wattpad. Naver Webtoon and Wattpad had a total of 5.7 million creators at the end of April, with more than 1 billion webtoons and web novels.

Naver is planning the collaboration between its drama production unit, Studio N, and Wattpad Studio to adapt more than 160 webtoons and web novels into movies and dramas this year. (Reporting by Choong-hee Won)