Kakao is working to persuade minority shareholders ahead of its planned corporate split. This effort comes as opposition from labor unions and some minority shareholders has emerged regarding the absorption merger of Kakao Investment, a key step in establishing the structure for the surviving company, Kakao X, which will manage investments and subsidiaries after the split.
According to industry sources, Kakao will hold a shareholder meeting on September 16 at 4 p.m. to discuss the details of the split, including its background and expected benefits.
Kakao stated that the purpose of the meeting is to help minority shareholders understand key issues. The company is expected to address shareholders' concerns and questions regarding the split during a Q&A session.
Kakao plans to split into a new entity, Kakao AI, and the surviving entity, Kakao X, in early 2027. Kakao AI will focus on KakaoTalk and artificial intelligence (AI) operations, while Kakao X will handle major subsidiary investments and new business development. The split ratio is set at 36.5% for Kakao AI and 63.5% for Kakao X, with existing shareholders receiving shares in both companies based on this ratio.
Additionally, Kakao is working to streamline its governance structure by merging Kakao Investment into Kakao X. This small-scale merger is scheduled for January 1, 2027. The merger can proceed with a board resolution without a shareholder meeting, but if shareholders representing more than 20% of the total shares express written opposition within a specified period, the merger cannot move forward. The deadline for minority shareholders to register their opposition is September 18.
There are approximately 1.6 million minority shareholders in Kakao, holding 64.83% of the total shares as of the second quarter of this year. The 20% threshold needed to block the small-scale merger corresponds to about one-third of the minority shareholders' holdings.
As a result, the amount of opposition shares counted by September 18 is expected to be a critical turning point for Kakao's governance restructuring. If opposition exceeds 20%, it could delay the merger of Kakao Investment and disrupt the timeline for restructuring Kakao X.
Minority shareholders are responding cautiously. According to the minority shareholder platform Act, they generally support the split as long as it includes a reassessment of shareholder value and protection of minority rights. However, they oppose any split that would harm shareholder value or infringe on minority rights.
The decline in stock prices following the announcement of the split has also heightened concerns among minority shareholders. On August 21, the day Kakao announced the split, the stock price fell by 7.49% to close at 35,800 won. This uncertainty regarding the valuation of Kakao AI and Kakao X and the restructuring process has dampened investor sentiment.
The Kakao labor union is also encouraging participation in expressing opposition to the small-scale merger. The Kakao branch explained that this action is separate from opposing the split itself and aims to demand that worker and shareholder opinions be reflected in the governance restructuring process. They are also considering joint responses with minority shareholders if necessary.
Approval for the split itself must be obtained at a special shareholders' meeting on December 17. With minority shareholders holding over 60% of the total shares, their votes will be crucial not only for the merger of Kakao Investment but also for the approval of the split at the end of the year.
During the upcoming meeting, Kakao will outline its growth strategy and shareholder return policies following the split. Key issues will include the appropriateness of the split ratio, the role of Kakao X, and strategies for enhancing corporate value post-split.
* This article has been translated by AI.
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