Kakao held a board meeting on the 21st and decided to spin off into Kakao AI and Kakao X. The split ratio, based on the book value of net assets, is 0.36 for Kakao AI and 0.64 for Kakao X. Existing shareholders will receive shares in both companies in proportion to their current ownership stakes.
Following an extraordinary general meeting of shareholders on December 17, the split will take effect on January 1 of next year, with Kakao AI set to be relisted and Kakao X to undergo a reclassification listing on January 27.
Management Resources Concentrated on Subsidiaries… “We Cannot Miss the Window for AI”
Kim Do-young, CEO-designate of Kakao X, revealed at a press briefing on Kakao’s corporate spin-off held that day that 23 of the major decisions made by Kakao’s board of directors over the past five years—accounting for approximately 85%—were related to subsidiaries. Among the 32 internal investment review cases in the past year, subsidiary-related items also accounted for 84%.
Kim stated, “While we were busy resolving and managing the many issues at our subsidiaries, a significant portion of Kakao’s core management resources was spent on urgent matters rather than important ones.” The assessment is that while the capital market has been demanding that Kakao commercialize B2C AI services and establish a clear revenue model over the past two to three years, the burden of managing subsidiaries has slowed down the parent company’s progress.
There was also a strong sense of crisis regarding AI competition. Kim remarked, “There was a desperate sense that we couldn’t miss this moment,” adding, “We were very concerned that if we didn’t accelerate our efforts now, we would miss a critical window of opportunity to become a leader in B2C AI services.”
Addressing the “conglomerate discount” was another challenge. While the combined value of Kakao’s individual businesses, as assessed by domestic and international securities firms, stands at 34.2 trillion won, its average market capitalization over the past three months has been 16.8 trillion won. Given that the expected rates of return and risk levels differ between the AI platform and the finance, content, and mobility sectors, the plan is to separate these two areas so that each can be properly valued.
Stock Price Plummets Despite ‘AI Gamble’… Past ‘Split’ Moves Fuel Distrust
However, despite this blueprint, the market’s reaction was lukewarm. On that day, Kakao’s stock price fell 7.49% on the KOSPI. Trading was suspended for 30 minutes starting at 10:04 a.m., when the announcement of the company’s decision to split was released. The decline, which had been in the 7% range before the trading suspension, widened to the 13% range after trading resumed.
This spin-off differs structurally from the asset spin-offs that drew investor backlash in the past. It is a stock spin-off in which existing Kakao shareholders directly hold shares in both Kakao AI and Kakao X, rather than Kakao X owning Kakao AI as a wholly-owned subsidiary and then relisting it. Nevertheless, the market’s sensitive reaction to the term “spin-off” is believed to stem from the “learned effect” left by the group’s past series of spin-off listings.
Previously, Kakao faced criticism for “splitting up and duplicate listings” after listing Kakao Games Corp., followed by KakaoBank Corp. and kakaopay in quick succession in 2021. In 2022, the market capitalization of the group’s listed companies fell by over 68 trillion won in just over seven months, as controversies over subsidiary listings and overvaluation led to investor distrust.
Accordingly, the current stock price reaction is interpreted as partly reflecting the market’s accumulated wariness stemming from past subsidiary IPOs, as well as uncertainty regarding the future fair value of the two companies. For the “reassessment of corporate value” intended by Kakao to translate into actual stock prices, the company now faces the challenge of demonstrating, through concrete figures, its growth potential and enhanced shareholder value following the spin-off.
No Plans to Convert to a Holding Company… CA Consultative Body System to End
Kakao’s group operating structure will also change significantly following the spin-off. Kakao AI and Kakao X will each operate independently. Kim, the nominee, drew a clear line, stating, “We have absolutely no plans to convert Kakao X into a holding company,” and added, “Joint organizations such as the existing CA Council are no longer necessary.” However, business collaboration between KakaoTalk and its affiliates will remain unchanged.
Kakao AI will shed the burden of managing subsidiaries and focus on KakaoTalk’s AI transformation. Jeon Jin-ah, CEO-designate of Kakao AI, said, “By separating the significant role of managing subsidiaries, we have established a clear business structure that allows us to concentrate solely on our core business.”
The company aims to achieve over 20 million daily active users (DAU) for AI by 2030 and increase time spent on KakaoTalk by more than 50%. It plans to grow agent-based advertising, commerce, and subscriptions as revenue streams and secure a market share of at least 5% in the search advertising market. The company has set targets of 1 trillion won in AI revenue, over 6 trillion won in total revenue for Kakao AI, and an operating profit margin of over 30% by 2030.
Kakao X will seek new growth drivers while nurturing existing subsidiaries, with a focus on tech-fin, content, and mobility. It will utilize a total of 6.4 trillion won—comprising 2.3 trillion won in its own investment funds and 4.1 trillion won in funds held by subsidiaries—to invest in virtual assets such as stablecoins, global fandom, robo-taxis, and smart logistics. The company also plans to expand investments in innovative overseas companies, particularly in the U.S.
Kakao X aims to grow its core business revenue from 5.6 trillion won in 2025 to over 10 trillion won by 2030. Kim, the nominee, emphasized that through the spin-off, “we will restore the growth pace that Kakao has always been proud of.”
Jeong Shin-ah, CEO of Kakao, said, “This spin-off is a decision to transition to a structure of speed and accountability suited for the AI era,” adding, “Both companies will enhance their execution capabilities through strategies and capital allocation tailored to their respective businesses.”
Founder Kim Beom-su stated, “The AI era demands a whole new level of agility,” adding, “We will redesign our growth structure using ‘two engines’: Kakao AI and Kakao X.”
