[E-Daily Reporter Lee So-Hyun ] Kakao(035720)has cleared the first hurdle in its spin-off into Kakao AI, an artificial intelligence (AI) business unit, and Kakao X, an investment firm. Since shareholders opposing the absorption merger with Kakao Investment held only about 2% of the total issued shares, the company can proceed with the small-scale merger based solely on board approval without holding a separate shareholders’ meeting.

According to the IT industry on the 22nd, the results of the opposition vote for the merger with Kakao Investment—which took place from the 7th to the 21st—showed that the opposing stake totaled approximately 2% of the total issued shares.

Initially, there was significant interest in whether the opposition stake would exceed the 20% threshold required to block a small-scale merger, as the Kakao labor union and some minority shareholders had encouraged participation in the opposition. Under the Commercial Act, a small-scale merger cannot proceed if more than 20% of the total issued shares oppose it.

Since the opposition fell significantly short of this threshold, Kakao will be able to proceed with the merger process via a board resolution, as planned, without holding a shareholders’ meeting. According to the announced schedule, the board meeting to approve the merger is set for November 6, and the effective date of the merger is January 1, 2027.

This merger is part of an effort to raise investment capital for Kakao X, the surviving entity following the spin-off. Under this structure, Kakao Investment will spin off its investment business as a corporate spin-off; the surviving entity, Kakao X Investment, will then absorb IVE through a merger, and subsequently merge with Kakao X. Kakao stated that the purpose of the merger is to “enhance corporate value through the simplification of the corporate structure.”

Kim Do-young, the nominee for CEO of Kakao X, personally explained the background of the merger at a meeting with minority shareholders on the 16th. He emphasized that since approximately 2.3 trillion won in cash held by the original Kakao would be transferred to Kakao AI during the spin-off process, Kakao X would also need investment funds. Kim said, “This is to merge Kakao Investment’s cash and cash equivalents into the parent company so they can be used as investment funds for Kakao X in the future.”

Kakao Investment is a wholly-owned subsidiary in which Kakao holds a 100% stake. Accordingly, the merger will proceed as a merger without a capital increase—meaning no new shares will be issued—and there will be no change in the number of shares or ownership stakes held by existing Kakao shareholders. Kim also explained at the meeting, “Since no new shares will be issued, the number of shares and ownership stakes held by shareholders will not be diluted.”

Kakao X plans to invest a total of 6.4 trillion won—comprising approximately 2.3 trillion won from the parent company’s investment funds (including Kakao Investment’s assets) and approximately 4.1 trillion won from investment funds of its fintech, content, and mobility subsidiaries—into developing new businesses and growing existing ones.

However, it is difficult to interpret this 2% opposition as a vote in favor of the spin-off. This tally only includes shareholders who separately expressed opposition to the small-scale merger of Kakao Investment; the spin-off itself, dividing the company into Kakao AI and Kakao X, must be approved by a special resolution at the extraordinary general meeting of shareholders on December 17. Previously, labor unions and small-shareholder groups had raised concerns regarding corporate value and job security following the spin-off.

Meanwhile, as of the end of June, Kakao’s shareholder composition was as follows: the largest shareholder and related parties held 24.1% of common stock, foreign investors held 26.7%, and domestic institutions held 10.8%. The stake held by individuals and other legal entities, excluding foreign investors and domestic institutions, was 38.2%.