Kakao Struggles to Soothe Minority Shareholders Ahead of Spin-off as Opposition Grows

KakaoAI Targets 6 Trillion Won, KakaoX Eyes 10 Trillion Won in Revenue by 2030
Minority Shareholders Maintain Opposition

Kakao, which is set to undergo a spin-off at the end of this year, has faced backlash from minority shareholders. As the decision to split was made while undervalued shareholder value remains unaddressed, a movement against the spin-off is emerging among minority shareholders.

According to the IT industry on September 17, Kakao explained the background for pursuing the spin-off, its future plans, and its shareholder value enhancement strategies through an online meeting with minority shareholders the previous afternoon. KakaoAI, which will be responsible for artificial intelligence (AI) and platforms, aims to increase its revenue to more than 6 trillion won by 2030. KakaoX, which will focus on new growth investments and managing affiliates, has set a goal of reaching 10 trillion won in revenue.

Kakao also detailed its shareholder return plan for minority shareholders. KakaoX will use 30% of the after-tax dividends received from subsidiaries as basic shareholder return funds. In addition, if investment gains occur, 30% of those gains—after deducting taxes and capital costs—will also be used for cash dividends, or the purchase and cancellation of treasury shares.

Kakao Pangyo Agit, Seongnam, Gyeonggi Province. Photo by Jin-Hyung Kang aymsdream@

The company also clarified facts regarding the suspicion that the primary purpose of the spin-off is not corporate growth, but rather strengthening the control of founder and largest shareholder Brian Kim. Kakao’s Chief Financial Officer, Shin Jonghwan, stated, “Since the spin-off structure allocates shares in both companies to all shareholders in equal proportion, the largest shareholder’s stake remains unchanged after the split.”

Kakao mentioned its plans for a unified membership program, which is scheduled for beta launch next month. Hyunsu Jeon, Business Division Leader at Kakao, said that the company is preparing an integrated membership connecting services such as mobility, content, and commerce around KakaoTalk. He explained, “Our goal is to enable users to utilize benefits accumulated across various services in one unified location.”

However, minority shareholders remain dissatisfied, as the information presented during the online meeting largely reiterated details previously disclosed at the time of the spin-off announcement. They feel that Kakao has failed to fully present a vision that demonstrates the tangible benefits of the spin-off or a clear plan to boost the share price.

During the Q&A session for shareholders at the meeting, only two questions—excluding those pre-selected by Kakao—were addressed on site. In response, the Kakao union criticized, “Although the company touted communication with minority shareholders, in reality, the meeting simply reiterated a predetermined outcome.” On the day the split was announced, Kakao’s share price dropped more than 12% during trading hours and is currently fluctuating in the lower to mid-30,000 won range.

Kakao is currently promoting a small-scale merger in which Kakao Investment will be absorbed as part of the spin-off process. This type of merger requires only board approval rather than a shareholders' meeting, unless shareholders holding at least 20% of the total issued shares express opposition—in which case, a shareholders' meeting is necessary.

Kakao now faces the challenge of persuading minority shareholders who are inclined to join the union-led movement against the spin-off. In fact, on the shareholder activism platform ACT, Kakao shareholders have been posting confirmations that they have expressed objections to the split.

The number of opposing votes at the extraordinary general shareholders’ meeting for the spin-off on December 17 will be a critical variable. The largest shareholder and related parties collectively hold 24.1% of Kakao shares, while institutions, individuals, and other shareholders hold the remaining 75.9%. As of the end of June, minority shareholders owned 64.83% of Kakao’s total issued shares.

This content was produced with the assistance of AI translation services.