Kakao Halts Kakao Mobility's U.S. Listing Bid, Citing Limited Benefits for Ordinary Shareholders

Concerns Over Decreased Corporate Value Due to Duplicate Listing

Kakao has decided to oppose the listing of American Depositary Receipts (ADRs) for its subsidiary Kakao Mobility. The company judged that the listing on the U.S. stock market is primarily focused on enabling Texas Pacific Group (TPG), the second-largest shareholder and a private equity fund operator, to recoup its investment, and therefore does not sufficiently serve the interests of ordinary Kakao shareholders.

According to the Financial Supervisory Service's electronic disclosure system (DART) on September 23, Kakao announced after the market closed the day before, “The board of directors discussed issues such as the impact on the company and its ordinary shareholders, measures to protect shareholders’ interests, and the company’s overall interests, and resolved to oppose pursuing an ADR listing under the current structure.”

The Kakao Mobility Shareholder Value Enhancement Committee had been reviewing a U.S. ADR listing based solely on the shares held by TPG. In July, it privately submitted a Form F-1, a registration statement for listing, to the U.S. Securities and Exchange Commission (SEC).

The Kakao board of directors assessed that this listing is centered on monetizing the holdings of a specific financial investor, and is unlikely to lead to economic benefits for ordinary shareholders.

The possibility of a decline in corporate value due to duplicate listings was also cited as a reason for opposition. The company is concerned that investment demand may become dispersed between the two companies, and that the stock price discount relative to Kakao’s net asset value (NAV) may widen. It also considered the increasing complexity of corporate value assessments, potential conflicts of interest between shareholders of both companies, and Kakao’s potential liability under U.S. securities law.

As a result of this resolution, the ADR listing is now highly likely to be effectively halted. However, Kakao emphasized that this decision does not deny the necessity for the financial investor to recoup its investment funds. The company stated that it is open to reconsidering the matter if the listing structure changes, if the economic benefits to Kakao and its ordinary shareholders are different, or if there is a request from regulatory authorities.

Kakao plans to provide an additional disclosure on the relevant matters either when specific details are confirmed or within six months.

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