[Edaily Reporter Lee So-Hyun ] Kakao(035720)has begun a full-scale effort to persuade minority shareholders ahead of its spin-off into Kakao AI and Kakao X. While the company emphasized the need for the spin-off—citing a focus on the artificial intelligence (AI) business and more efficient decision-making—at a press conference last month, this time it has highlighted the evidence that the spin-off can actually lead to increased shareholder value, along with specific shareholder return measures and plans to maintain business synergies after the split.

Kim Do-young, CEO-designate of Kakao X (Head of the Group Investment Strategy Office), explained the spin-off plan during an online meeting with minority shareholders on the 16th, stating, “We’ve included much of what we heard during investor relations (IR) sessions with domestic and international institutional investors over the past three weeks, as well as many points shareholders might be curious about.”

“Market Cap Up 32% for 6 Companies Following Spin-Offs”… Shareholder Value Takes Center Stage

Kakao highlighted shareholder value as its top priority, citing previous domestic spin-off cases. Kim emphasized that the company’s own analysis of six domestic cases—excluding those aimed at converting to a holding company structure—showed that the combined market capitalization of the two companies, when comparing the day before the spin-off board meeting to the day of relisting or reclassification, increased by an average of 32 percent, describing this as a “statistically proven case.” The companies were, in order: SAMYANGHOLDINGS (84% increase in market cap after spin-off announcement), Hyosung (20%), HANWHA AEROSPACE (36%), SAMSUNG BIOLOGICS (20%), SK D&D Co., Ltd (4%), and GS Retail (2%).

Regarding the timing of the spin-off, Kim stated, “The subsidiaries have now grown to be as large as Kakao, which we might call the ‘mother’ company.” He explained that since KakaoBank Corp. has already surpassed Kakao’s core operating profit and companies like Kakao Mobility have grown into independent businesses that no longer rely on KakaoTalk, it is time to separate the AI-focused core business from the investment and management functions of the subsidiaries.

The current split ratio, based on net assets, is 0.64 for Kakao X and 0.36 for Kakao AI. However, he added that this ratio may change slightly, as an accounting firm will prepare revised financial statements after the split date of January 1 next year to finalize the ratio.

“This Is Not an Asset Spin-off”… Drawing a Clear Line Despite Strengthening the Largest Shareholder’s Control

Kakao also went to great lengths to address concerns raised by individual shareholders regarding a “splitting scheme via an asset spin-off.”

In an asset spin-off, the parent company retains 100% ownership of the new entity’s shares, meaning existing shareholders do not directly receive shares in the new company. In contrast, under this stock split, existing shareholders will receive shares in both Kakao X and Kakao AI in proportion to their current ownership stakes. For example, a shareholder currently holding 100 Kakao shares would be allocated approximately 64 shares of Kakao X and approximately 36 shares of Kakao AI based on the planned ratio. Fractional shares (less than one share) will be settled in cash.

The company also refuted claims that the split was intended to strengthen the controlling shareholder’s influence. Shin Jong-hwan, Kakao’s Chief Financial Officer (CFO), stated, “Since all shareholders will be allocated shares in both companies at the same ratio, the controlling shareholder’s ownership stake will remain unchanged from before the split,” adding that the company has no plans for a capital increase through in-kind contributions or a transition to a holding company structure.

The absorption merger with Kakao Investment will also proceed without issuing new shares. Since Kakao holds a 100% stake in the company, making it a wholly-owned subsidiary, there will be no change in the number of shares or ownership percentage held by existing shareholders.

Dunamu to Return 30% of Capital Gains… Shareholder Returns Also Specified

To persuade minority shareholders, the company also presented its shareholder return plan with specific figures. Kakao X announced that it will use 30% of the after-tax dividends received from its subsidiaries as the primary source of funds for shareholder returns. Additionally, if capital gains are realized, the company plans to use 30% of those gains—after deducting taxes and capital costs—for cash dividends or the repurchase and cancellation of treasury stock.

In particular, using the capital gains from the sale of its Dunamu stake as funding, the company will repurchase and cancel a total of 300 billion won worth of treasury stock over the three years following the spin-off. The company also plans to apply the same principle should additional profits be realized from its investment assets, such as SKTelecom and Kadokawa. Kakao AI will allocate 20–35% of its adjusted free cash flow (FCF) to shareholder returns and will increase the return ratio to a maximum of 40% if FCF grows by more than 50% compared to the previous year.

Kim, the nominee, stated that the sale of Dunamu shares generated approximately 1 trillion won in after-tax capital gains, adding, “We plan to return 30% of that amount to shareholders as a token of our commitment.”

“Services Will Remain Integrated Even After the Split”… Preparations for a Unified Membership Program

In response to concerns that synergies among affiliates might weaken following the spin-off, he cited the integrated membership program as a concrete example.

Jeon Hyun-soo, Head of Business Operations, explained, “We are preparing a membership program that connects affiliated services—such as mobility, content, and commerce—centered around KakaoTalk user touchpoints,” adding, “The goal is to allow users to redeem benefits accumulated across various services in one place.” The company is currently in the stage of designing and validating the business model. The plan is to continue collaboration between affiliates based on contracts and services—rather than equity relationships—even after the spin-off.

A question was also raised regarding the possibility that Kakao X might be undervalued as an investment company with only subsidiaries. Kim, the nominee, said, “After the spin-off, if we disclose the business plans and performance of Kakao Mobility, Entertainment, and Techfin in greater detail than we do now, allowing shareholders to evaluate the subsidiaries more thoroughly, the discount rate will decrease compared to current levels.”

He also provided a clearer timeline for the AI business. Kakao plans to demonstrate its agentic AI service at “if(kakao)” this October, secure 5 million monthly active users for AI services within KakaoTalk this year, and begin full-scale monetization starting in 2027. By 2028, the company aims to increase the share of AI revenue in KakaoTalk-based businesses to a double-digit percentage, with targets of 1 trillion won in AI revenue and over 6 trillion won in total Kakao AI revenue by 2030.

Kakao is scheduled to seek approval for the spin-off at an extraordinary general meeting of shareholders on December 17.