On Monday, Korean chat app operator Kakao Corp announced a $1.6 billion USD deal to buy a controlling stake in South Korea's MelOn Music streaming service.

Kakao will buy a 76.4 percent stake in MelOn operator Loen Entertainment. Loen Entertainment is the home of IU, History, and other K-pop acts. It is Kakao's largest deal since a 2014 merger with Korean search engine operator, Daum.

Following the acquisition, Kakao will have the majority stock in Korea's biggest streaming service.

The deal comes at a time Kakao is looking to diversify. Currently, the company's chat app, KakaoTalk, is the dominant app in South Korea. With the acquisition of MelOn, Kakao looks to get the jump on Spotify, the popular music streaming service, which has yet to launch in South Korea.

According to Reuters, South Korea's music streaming and download market was worth an estimated $406 million USD in 2015.

KakaoTalk is used by around two-thirds of South Korea's population, with 37 million users in a country of 50 million.

Melon has 28 million users in South Korea, reports Yonhap.

"Music is one of the most loved content genres in the mobile era," said Kakao's CEO Jimmy Rim. "It is also incredibly powerful in that one song can set trends for an entire generation and highly influence global pop culture."

On March 14, Kakao will issue new shares with a price tag of 109,121 won (~$100 USD).

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