Kakao is actively engaging with minority shareholders ahead of its planned spin-off. Following the announcement of the spin-off, concerns about the division ratio and potential damage to shareholder value have arisen, prompting the company to directly address these issues.
Kim Do-young, the designated CEO of KakaoX and current head of Kakao Group's investment strategy, held an online meeting with minority shareholders on September 16, explaining that the spin-off aims to clarify the growth strategies and resource allocation for both KakaoX and KakaoAI.
"The goal is to establish a clear identity for our AI business so that we can be recognized as an AI company in the market, thereby enhancing shareholder value," Kim stated. He outlined plans to eliminate the conglomerate discount and accelerate growth for each business segment.
The meeting included Kim Do-young, designated CEO of KakaoX, Shin Jong-hwan, CFO, Jeon Hyun-soo, head of business operations, and Hwang Yu-seon, head of growth strategy.
Kim noted, "Since the announcement of the spin-off, we have conducted investor relations with both domestic and international institutional investors to gather various opinions. We have incorporated shareholders' inquiries into this explanation."
He explained that the purpose of the spin-off is to optimize resource allocation and strategic execution by business area, while also clarifying KakaoAI's identity. The aim is to establish a foundation for KakaoAI to be recognized as an AI company in the market and ultimately increase shareholder value.
Kakao cited the need to address the conglomerate discount, reassess its AI business, and improve decision-making and capital allocation efficiency as reasons for pursuing the spin-off. Over the past five years, 23 out of 27 non-routine agenda items discussed by the board were related to subsidiary support and restructuring, accounting for 85%, which hindered Kakao's ability to focus on its core business and investments.
Kakao presented a combined business value of 34.2 trillion won, with an average market capitalization of 16.8 trillion won over the past three months, indicating a significant undervaluation of the company.
KakaoX will focus on the growth of its tech-finance, content, and mobility subsidiaries, as well as investments in new businesses and innovative companies. KakaoAI will expand its revenue models based on AI, particularly in advertising and commerce, centered around KakaoTalk. KakaoX and its major subsidiaries will utilize over 6.4 trillion won in investment resources, while KakaoAI plans to concentrate on AI investments based on an annual EBITDA generation capacity of over 700 billion won.
Kakao aims to increase combined revenue from 8.3 trillion won in 2025 to over 16 trillion won by 2030, with KakaoX targeting over 10 trillion won and KakaoAI aiming for over 6 trillion won.
The shareholder return policies will be differentiated according to the business characteristics of both companies. KakaoX plans to use 30% of the after-tax dividends received from subsidiaries for dividends and share buybacks or retirements, and will consider special shareholder returns when investment gains occur. The company also plans to conduct a total of 300 billion won in share buybacks and retirements over the three years following the spin-off.
KakaoAI intends to allocate 20-35% of its adjusted free cash flow for basic shareholder returns, with plans to increase the return rate to a maximum of 40% if free cash flow increases by over 50% compared to the previous year.
Kakao plans to finalize the spin-off with a temporary shareholders' meeting on December 17, 2026, and execute the division on January 1, 2027, with KakaoX's new listing and KakaoAI's relisting scheduled for January 27 of the same month.
* This article has been translated by AI.
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