[Edaily Reporter Lee So-Hyun ] “There are absolutely no plans for a block deal involving founder Kim Beom-soo.”

Kakao(035720)Kakao sat down again with minority shareholders ahead of its spin-off. The company drew a clear line against the possibility of a block deal involving founder Kim Beom-soo’s shares, the sale of key subsidiaries, and a third-party private placement by the newly established Kakao AI, and also announced plans to disclose AI revenue separately following the spin-off.

At the meeting, Kakao’s past issues—including its sprawling business expansion, “split listings,” stock sales by affiliate executives, and prolonged stock price declines—were repeatedly brought up. Sharp questions questioning the practical benefits of the spin-off poured in, such as, “Why split up businesses that the existing Kakao could handle on its own?” and “Who will take responsibility if the stock price doesn’t recover after the spin-off?”

Approximately 50 people attended the meeting with minority shareholders held on the 20th at the FKI Tower in Yeouido, Seoul. Kim Do-young, CEO-designate of Kakao X, Shin Jong-hwan, Chief Financial Officer (CFO), and Jeon Hyun-soo, Business Performance Leader, answered about 20 questions over the course of approximately 1 hour and 30 minutes without delivering separate presentations.

“No

Block Deals or Subsidiary Sales”… Kakao AI Capital Increase Also Denied

In response to questions about Founder Kim’s legal risks and the possibility of a block deal following the corporate spin-off, CFO Shin stated, “We currently have absolutely no such plans,” adding, “The situation does not even warrant a block deal.”

Addressing concerns that Kakao X might become a vehicle for disposing of stakes in subsidiaries such as KakaoBank Corp., Kakaopay, and Kakao Entertainment, Kim, the CEO-designate, drew a clear line, stating, “This spin-off is not intended to facilitate the sale of subsidiaries,” and emphasized that there had been no related discussions or reviews.

However, he noted that the issue of financial investors’ (FIs) exits—such as the planned issuance of American Depositary Receipts (ADRs) for Kakao Mobility—is a separate matter. He explained that while the company will comply with the rights of FIs and its obligations under past investment agreements, it will make decisions in a way that also protects the shareholder value of the parent company.

He also denied the possibility of a third-party private placement by Kakao AI. CFO Shin stated, “We have never considered it, nor are we currently considering it,” adding that investments in GPUs and infrastructure can be covered by the company’s own cash flow. He explained that of the approximately 3 trillion won in debt to be assumed by Kakao AI, about 2 trillion won consists of operating liabilities—such as prepaid customer funds from the commerce division—and that “borrowings subject to interest expenses are virtually zero.”

Kakao AI Targets 6 Trillion Won in Revenue by 2030… 3 Trillion from Advertising, 2 Trillion from Commerce, 1 Trillion from AI

Kakao AI’s 2030 revenue target of 6 trillion won has also been specified. Jeon set targets of approximately 3 trillion won for advertising, 2 trillion won for commerce, and 1 trillion won for the AI business.

In response to concerns that AI could cannibalize existing advertising and commerce businesses, he argued that it would instead become a new revenue stream. He explained that AI on KakaoTalk could facilitate product discovery, price and review comparisons, and purchases, while also connecting users to external shopping malls, reservation services, airlines, and hotels to generate transaction fees.

To allow investors to verify actual AI performance, the company plans to separately report revenue from the AI division going forward.

Shareholders also raised concerns about Kakao’s past history of indiscriminate expansion, the spin-off listings of affiliates, and the sale of shares by executives. Kim, the nominee, responded, “The entire management team deeply sympathizes with and reflects on the negative issues raised in the past,” adding that the company has recently reduced the number of affiliates and strengthened internal procedures regarding executive stock sales.

Addressing concerns that Kakao X—which no longer includes KakaoTalk—might suffer from an “investment company discount,” he said the company would focus on growing its finance, mobility, and content businesses as key growth drivers and actively disclose the performance and business plans of its subsidiaries to reduce the discount rate.

Stock Price Down 19% in Two Months; Angry Shareholders Demand “Shareholder Value Reflected in Executive Compensation”

The sharp questions from shareholders that day were also influenced by the stock price decline following the spin-off announcement. Kakao’s stock price plummeted 7.49% from 38,700 won on August 20—just before the announcement of the spin-off—to 35,800 won on the day of the announcement. The closing price that day was 31,200 won, marking a 19.4% drop over the past two months.

Kim, the nominee, stated that following the spin-off, he would discuss with the new board of directors plans to establish key performance indicators (KPIs) for Kakao AI and Kakao X, and to incorporate stock price and enterprise value into executive evaluations and compensation. Kakao X will also consider investment performance and the reduction of the enterprise value discount rate as evaluation metrics.

The company also reaffirmed its existing shareholder return policies. Kakao X will return 30% of dividends from subsidiaries and 30% of gains from the sale of investment assets to shareholders, while Kakao AI will return 20–35% of its adjusted free cash flow. The company will also proceed as planned with a three-year, 300 billion won share buyback and cancellation program, funded by profits from the sale of its stake in Dunamu.

Communication with the market will also be increased. Kakao X plans to hold investor relations (IR) sessions on subsidiary growth strategies—such as joint group analyst briefings—at least once a year, and also plans to hold an IR session for major overseas investors next month.

Mr. Kim, the nominee, emphasized, “The first thing management must do to enhance shareholder value and the stock price is to deliver strong financial results.”

Kakao will put the spin-off proposal to a vote at an extraordinary general meeting of shareholders on December 17. If approved, the company will split into Kakao X and Kakao AI, and the newly established Kakao AI will proceed with the relisting process.

When asked whether the split ratio—64% for Kakao X and 36% for Kakao AI—undervalued the AI division, he drew a clear line, stating, “The split ratio is not a measure of enterprise value.” Kim explained that the ratio is based on the allocation of shares according to net asset value, adding that the opening price upon relisting will be determined within a range of 50–200% of the reference price. He noted that price limits will then apply, and the actual market value of both companies will be reassessed after relisting.