The cacao is split again. Kakao Group, which has reduced its affiliates from 145 to 92 to eliminate ..

Kakao AI Announces Listing of Split under the Name of AI

사진 확대 CEO Jung Shin-ah, who is currently CEO of Kakao and will move to Kakao AI, a newly established corporation [Yonhap News]

The cacao is split again. Kakao Group, which has reduced its affiliates from 145 to 92 to eliminate the notoriety of “octopus Listing,” will divide its main body into two again, this time into Kakao AI and Kakao X. The justification is to strengthen the competitiveness of artificial intelligence (AI). Everyone can know it because it is attached to the name of the new company.

However, the inside seems to have been influenced by major shareholders such as Tencent and BlackRock, excluding the founder. China’s Tencent affiliate MAXIMO has become Kakao’s second-largest shareholder by increasing its stake to 5.7% (as of August 20 of F&Guide). U.S.-based BlackRock also became a major shareholder, surpassing 5% of its stake again. Kakao has about 1.6 million minority shareholders, accounting for 60% of all shareholders.

In the end, it can be seen that the restructuring of the governance structure is not only in the name of strengthening AI competitiveness but also in line with the enhancement of corporate value demanded by global institutional shareholders in the U.S. and China. What should investors do. Fortunately, there is a previous case. As SK Telecom is split into a telecommunications company (telecom) and an investment company (square), investors should make long-term investments by referring to the mixed feelings of investors.

Splitting Kakao, which resembles SK Telecom’s human division

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Kakao held a board meeting on the 21st and announced that it had decided to divide people into Kakao AI (new corporation) and Kakao X (existent corporation). Kakao AI will deploy Kakao Talk and AI, advertising, and commerce businesses, and will be led by current Kakao CEO Jung Shin-ah. Kakao X drew a “picture” as it will be reorganized into an investment company with major affiliates such as Kakao Bank, Kakao Pay, Kakao Mobility, and Kakao Entertainment.

The split ratio is Kakao X 0.6351463 versus Kakao AI 0.3648537. It is divided into 64% Kakao X and 36% Kakao AI. Existing shareholders are allocated shares of both companies according to this ratio. This is called human division. It is a better way for investors because they receive stocks from new companies.

A typical example is that in 2021, SK Telecom was divided into a telecommunication business company ‘SK Telecom’ and an investment company ‘SK Square’. An older example is LG Electronics in 2002. At that time, LG Electronics was divided into a holding company called ‘LGEI’ and a new ‘LG Electronics’ in charge of electronics and information and communication businesses. LGEI was later merged with LGCI, and the current LG Group holding company system was completed as the merged company changed its name to LG.

The way that contrasts with human division is material division. It is a method in which Company A holds 100% of the shares of the new company B through physical division. Existing shareholders of Company A do not receive shares of Company B directly. The problem is when Company B is listed separately (IPO). A representative example is that LG Chem split into LG Energy Solution (NSOL), but existing LG Chem shareholders did not receive a single share of LG Ensol.

In the case of Kakao, the case of SK Group should be referred to rather than LG because it is a human division method. Kakao’s division process is scheduled to be completed on January 1, 2027, after an extraordinary general meeting of shareholders on December 17. Kakao AI re-listing and Kakao X change listing will be promoted on the 27th of the same month.

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