Kakao is restructuring its growth framework to align with the artificial intelligence (AI) era. On August 21, the company held a board meeting and resolved to split into a new entity, KakaoAI, and a continuing entity, KakaoX.
KakaoAI will serve as an 'AI core company' connecting KakaoTalk with AI, advertising, and commerce, while KakaoX will focus on the growth of key subsidiaries in tech finance, content, and mobility, acting as a 'future value investment company.'
The split involves distributing shares of the new entity to existing shareholders based on a predetermined ratio, differing from a physical split where the continuing entity retains 100% ownership of the new entity. The split ratio was set at 0.36 for KakaoAI and 0.64 for KakaoX, based on net asset book value. Existing Kakao shareholders will receive shares in both companies according to this ratio.
Kakao plans to hold an extraordinary general meeting on December 7 to approve the split, with the division expected to be completed by January 1, 2027. Following this, KakaoAI will be relisted on January 27, and KakaoX will undergo a change in listing.
As Kakao separates its AI and investment businesses, attention is turning to the future relationship and governance structure of the two entities. There is speculation about the possibility of one entity becoming the largest shareholder of the other, similar to the structure seen with SK Telecom and SK Square, as well as whether KakaoX will transition into a holding company.
Below are key questions and answers from the explanation session held on August 21 regarding the split.
Q. Is there a possibility that KakaoX will transition into a holding company in the future?
Kim Do-young, designated CEO of KakaoX: There are no definitive plans to convert KakaoX into a holding company. I am aware that the media has discussed this possibility several times, but currently, there are no such plans. After the split, the business purposes of the two companies will differ, and they will continue to operate independently.
Q. Isn’t KakaoX effectively acting as Kakao’s holding company? Is there a possibility that the CA Council will take on a holding company role?
Kim Do-young: After the split, the business purposes of the two companies will be different. We believe that a CA Council in its previous form is unnecessary. Each company will operate under independent governance with responsible management.
Q. Kakao has been simplifying its governance; why is it splitting into two companies now?
Kim Do-young: There was a pressing need to accelerate our competitiveness in the AI era. The existing structure required significant decision-making capacity for subsidiary support and management, which led to opportunity costs in focusing on core business capabilities and capital allocation. We believe that missing this moment could result in losing critical timing in the AI competition.
Q. What specific improvements in corporate value do you expect from the split?
Kim Do-young: Kakao has been undervalued as a diversified conglomerate. Recently, Kakao's average market capitalization has been around 16.8 trillion won, while we believe the market has undervalued it by about 17.4 trillion won. By separating the AI business into a distinct entity, we aim to receive a valuation appropriate for an AI company, while ensuring that KakaoX's assets and investment performance are accurately reflected in its corporate value.
Q. How will the role of founder Kim Beom-soo change after the split?
Kim Do-young: The role of the founder and major shareholder will remain unchanged after the split. The share distribution will maintain the same ratio before and after the split, so there will be no change in ownership percentage. However, each entity will maintain independent governance and responsible management systems.
Q. Will the separation of KakaoAI and KakaoX weaken group-level synergies?
Kim Do-young: Given that the business purposes of the two companies are different, the shareholder composition may change over time, excluding major shareholders, and independent management will be implemented. However, the fact that each business is organically connected through the Kakao platform will not change. Group-level business connections and synergies will be maintained even after the split.
Q. What other businesses will KakaoAI oversee besides KakaoTalk?
Jeong Sin-a, designated CEO: Most employees currently at Kakao headquarters will move to KakaoAI. This includes major business organizations such as KakaoTalk, maps, business, and AI. The core focus will be to connect AI with advertising and commerce centered around KakaoTalk, and to integrate AI into existing core businesses to create new growth opportunities. Employee working conditions will be fully transferred, and stock options will also be divided according to the split ratio.
Q. KakaoAI's goal of achieving 20 million daily active users and 6 trillion won in revenue by 2030 is quite ambitious. What is the strategy to achieve this?
Jeong Sin-a: KakaoTalk already has about 30 million users who engage daily. We believe that as AI becomes more integrated into KakaoTalk, the number of users actively using AI will significantly increase. We will create a structure that allows more users to use AI more frequently based on on-device AI and low-cost, high-efficiency inference technology. Through this, we aim to achieve 20 million AI daily active users by 2030 and increase the time spent on KakaoTalk by over 50%.
Q. What is KakaoAI's specific revenue model?
Jeong Sin-a: We plan to establish new revenue models centered around agentic advertising, agentic commerce, and subscriptions. When users convey their intentions in natural language, AI will suggest products and facilitate purchases. Transaction fees generated through connections between external ecosystems and agents could also become a new revenue source. We aim for an average annual revenue growth of over 20% and to exceed 6 trillion won in revenue by 2030.
Q. How will the shareholder return policy change after the split?
Kim Do-young: KakaoAI has established a separate shareholder return policy. KakaoX plans to distribute 30% of its subsidiary dividend income to shareholders and will also consider special dividends if significant investment returns occur. The remaining 70% will be reinvested to enhance asset value.
Q. How will KakaoX evaluate its investment performance?
Kim Do-young: The key metric will be how quickly we can grow the net asset value (NAV) of the assets under KakaoX. We will leverage Kakao's past experiences in discovering and growing new businesses such as Kakao Bank, Kakao Pay, and Kakao Mobility, as well as our investments in Dunamu, Carrot, and Korea Credit Data, to continuously identify new growth drivers.
* This article has been translated by AI.
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