South Korean entertainment firm Starmax has announced a merger with Gaonix, a holding company listed on Korea's KOSDAQ exchange. The merger is seen as being partly motivated by Starmax's unsuccessful bid for a listing on the exchange last year.

Starmax, a longtime leader in the home video market, was originally spun off of Samsung Entertainment Group in 1984. In September 1999 the company was acquired by Japan's Omega Group, and since then it has diversified into the fields of music, computer games, and film production and investment. It was an investor in the Japanese film Go as well as Iron Palm, an upcoming Korean production shot in Los Angeles.

Holding company Gaonix owns production house My Film and TV company JS Pictures as well as companies related to music, sports, and other fields. It has been listed on the KOSDAQ exchange since 1994.

The merged entity will take the name of Gaonix, and is expected to be operational by May 28. The group will be headed by Chairman Yokohama Toyoyuki of Omega Group and Vice Chairman Hwang Kyung-ho, presently CEO of Gaonix. Gaonix Media Entertainment will encompass all entertainment-related affiliates and will be headed by former Starmax president Kim Min-ki. The Starmax home video label, which has contracted a video/DVD distribution agreement with Universal Pictures Korea, will retain its brand name.

The merged company, estimated to have a market value of over $75m, reportedly plans to target the rapidly growing Chinese market.