Second retail shareholder forum held to explain spinoff rationale
Kakao vows detailed earnings disclosure to address KakaoX undervaluation fears
Kakao has drawn a firm line against selling key subsidiaries or conducting block deals following its planned spinoff, saying it will focus on ensuring the market properly recognizes the value of its businesses while addressing shareholder concerns about the restructuring.
Kakao held its second retail shareholder forum Tuesday at the FKI Tower Conference Center in Yeouido, Seoul.
At the event, the company outlined its growth strategy and plans to enhance shareholder value following next year's spinoff. Kim Do-young, the CEO-designate of KakaoX, joined other senior executives to discuss with retail shareholders the rationale behind the spinoff, post-split growth strategies, and measures to boost corporate and shareholder value.
Kakao flatly denied rumors of subsidiary sales and block deals after the spinoff, calling them groundless. When shareholders raised questions about the possible sale of major financial affiliates such as Kakao Bank and Kakao Pay, Kim said the spinoff "has absolutely nothing to do with the sale of subsidiaries" and that "not a single related rumor has ever been discussed." He added that "block deals after the spinoff are simply out of the question."
Shareholders also raised concerns that KakaoX could be undervalued by the market. Kakao said it would work to ensure each business's value is fully reflected in market assessments by releasing detailed earnings and growth strategies for its key segments — including tech-fin, content and mobility — after the split. The company also expressed its intention to narrow the gap between net asset value and market valuation.
Questions about the necessity of the spinoff followed. Kakao said it had reached the limits of pursuing AI and KakaoTalk-centered advertising and commerce businesses while simultaneously driving the growth of major subsidiaries under a single decision-making structure. The company said it is proceeding with the spinoff to respond to rapid changes in the AI industry and to sharpen business-specific expertise and speed up decision-making.
Kakao also reaffirmed its shareholder return plans after the split. It intends to allocate 30 percent each of KakaoX's subsidiary dividends and investment gains toward shareholder returns, and plans to carry out a share buyback and cancellation worth 300 billion won ($225 million) following the spinoff.
Kakao AI said it would direct 20 to 35 percent of its adjusted free cash flow toward shareholder returns, and added that if free cash flow rises more than 50 percent year on year, the return ratio would be expanded to as much as 40 percent.
"Enhancing corporate and shareholder value through the spinoff is the primary goal of this restructuring," Kim said. "We will execute our growth strategy with urgency while doing our utmost to build trust — by fully explaining the rationale behind the split and our future growth plans to shareholders and listening carefully to their views."
Meanwhile, Kakao plans to expand communication opportunities to broaden market and shareholder understanding of the spinoff. In addition to the first and second retail shareholder forums, the company held a joint analyst briefing on Oct. 13 featuring CEOs of its major affiliates.
chami@heraldcorp.com
