Kakao rules out turning Kakao X into holding company

Kakao Corp. said Friday it has no plans to turn Kakao X, the investment company created through its planned corporate split, into a holding company, with CEO nominee Kim Do-young stating 'absolutely no plans' for such a conversion. The board approved splitting into Kakao AI and Kakao X with a ratio of 0.36 to 0.64, and Kakao AI targets over 6 trillion won ($4.3 billion) in annual revenue by 2030, including at least 1 trillion won from AI-related businesses.

Kakao said Friday it has no plans to turn Kakao X, the investment company to be created through its planned corporate split, into a holding company. “We can say with certainty that there are absolutely no plans to convert Kakao X into a holding company after the split,” Kim Do-young, CEO nominee for Kakao X, said at a briefing Friday afternoon. Kakao’s board earlier Friday approved a plan to split the company into Kakao AI, a newly established entity, and Kakao X, which will remain as the surviving company. The split ratio was set at 0.36 for Kakao AI and 0.64 for Kakao X, based on the book value of their respective net assets. Existing shareholders will receive shares in both companies in line with the ratio. Kakao AI will focus on KakaoTalk and artificial intelligence, while Kakao X will serve as an investment and portfolio management company, holding stakes in affiliates and supporting their businesses and investments. Kim said the restructuring is designed to draw a clear line between Kakao’s operating businesses and its investment functions. “The key principle is the structural separation of the AI operating company and the investment company,” he said. “Kakao AI will focus on KakaoTalk and AI technologies and hold subsidiaries that support its infrastructure and services, while Kakao X will manage the group’s affiliate portfolio and investments.” Kakao will also disband the corporate alignment council, its groupwide coordinating body, after the split. The council has played a central role in coordinating the group as Kakao simultaneously ran KakaoTalk-based businesses, including advertising and commerce, and managed its affiliates. Kakao said the need for such a joint organization will disappear once those functions are separated. “After the split, the two companies will have different business objectives and will be managed independently,” Kim said. The separation, however, will not affect business cooperation between KakaoTalk and Kakao affiliates. “Close cooperation between the KakaoTalk platform and the subsidiaries will continue as before,” Kim said. Kakao AI, meanwhile, set a target of generating more than 6 trillion won $4.3 billion in annual revenue by 2030, including at least 1 trillion won from AI-related businesses. By transferring responsibility for affiliate management to Kakao X, the company plans to concentrate Kakao AI’s resources on KakaoTalk, artificial intelligence, advertising and commerce while developing new sources of revenue. “The split will allow us to separate the significant responsibility of managing subsidiaries and establish a clearer business structure focused on our core businesses,” said Chung Shin-a, CEO nominee for Kakao AI. Chung said Kakao AI aims to sustain annual revenue growth of around 20 percent through 2030. Kakao founder Kim Beom-su is expected to remain a major shareholder of both companies after the split. “We expect the founder to continue his role as a major shareholder of both companies and support their growth and innovation, as he does today,” Kim Do-young said. Kim added that the two companies will continue to operate under independent governance structures after the separation. “Each company will maintain responsible management and independent governance,” he said. Kakao plans to seek shareholder approval for the split at an extraordinary general meeting Dec. 17 and complete the separation Jan. 1, 2027. After a temporary suspension in trading, Kakao X is scheduled to resume trading through a change listing, while Kakao AI will be relisted Jan. 27. yeeun@heraldcorp.com