Kakao Aims to Be Evaluated as an AI Company Following Management Restructuring

Kakao is holding a virtual meeting with small shareholders ahead of its December 12 implementation of a management restructuring. The company has seen growing opposition among small shareholders who hold 64.83% of Kakao's shares, as the restructuring requires approval from over one-third of shareholders at an upcoming special general meeting.

Kakao's leadership explained that there are no plans for additional capital increases or holding company conversions. The company aims to clarify growth strategies and resource allocation for its KakaoX and KakaoAI divisions through the restructuring, with the goal of increasing shareholder value.

During a virtual meeting held on the 16th via Zoom titled 'Small Shareholder Meeting Regarding Management Restructuring,' KakaoX CEO-designate Kim Do-yeong stated that the company will clearly define its identity as an AI business to be evaluated accordingly, which could lift its current undervaluation due to conglomerate discounts.

Small shareholders have been largely opposed to the restructuring. A platform called Act conducted a shareholder vote from late last month through early this week, with 99.9% of respondents opposing the restructuring and requesting active countermeasures. Many cited insufficient necessity for splitting the company into two entities and concerns that conglomerate discounts would simply shift to KakaoX.

To address these concerns, Kakao announced a major shareholder return plan. Kim stated that KakaoX will allocate 30% of investment gains from assets like SK Telecom and Kadokawa after taxes and capital costs for special dividends or buybacks, while KakaoAI will dedicate 40% of its free cash flow to shareholder returns.

Despite these measures, some small shareholders remain skeptical. One shareholder noted that Kakao's previous split-up listings had weakened the company's competitiveness and caused significant stock volatility. The stock closed down 2.9% at 33,500 won on the day of the meeting, a 13.43% decline from its pre-announcement price on October 20.