CJ O Shopping Co., a TV home shopping channel and online shopping mall operator of South Korea’s CJ Group, will merge with the group’s entertainment arm CJ E&M Corp. on a swap deal at a ratio of 1 to 0.41 in hopes of moving ahead its rivals in a fast changing environment by combining commerce and media.

The two firms said in a regulatory filing on Wednesday that they have voted for a plan to be united at a board of directors meeting held on Tuesday. The merger is scheduled to be completed by August 1 after getting shareholders’ approval in June. Following the merger, CJ O Shopping will assume CJ E&M’s businesses, according to the filing.

As of 12:43 p.m. on Thursday, shares of CJ O Shopping fell 5.96 percent to 239,800 won and those of CJ E&M were down 0.82 percent to 97,200 won in Seoul trading.

Industry watchers expect the marriage would help the firms to preemptively respond to the rapid changes in the global media industry and create a new market converging media and commerce. An official from CJ Group said that it expects the merger would boost its stagnant home shopping business by utilizing CJ E&M’s prowess in content creation, and help it expand global business. Latest move has come as CJ Group is seeking to reorganize its businesses into three main sectors - food, logistics and entertainment, and foster new growth engines.

CJ O Shopping has been implementing differentiated strategies to boost its sales since last year. Last year, it presented one of the nation’s most popular boy bands Super Junior as home shopping hosts to sell padded coats and every product sold out within an hour. The two companies are expected to try new attempts by combining CJ E&M’s data on media consumption patterns and CJ O Shopping’s big data on shopping and commerce trend to create customized contents and products and showcase them through virtual reality (VR) or augmented reality (AR).

CJ O Shopping and CJ E&M have set a goal to raise 350 billion won ($327 million) in operating profit and 4.4 trillion won in revenue together this year after the merger. It aims to achieve an annual sales growth rate of 15.1 percent by 2021 by promoting new businesses.

By Lee Han-na and Choi Mira

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