Kakao addresses shareholder concerns regarding upcoming spin-off

Kakao executives held a second minority shareholder meeting to clarify the company’s strategy regarding its planned spin-off into KakaoAI and KakaoX, scheduled for January next year. During the meeting, leadership dismissed rumors regarding the potential sale of major subsidiaries like KakaoBank or KakaoPay, labeling such claims as “groundless” and stating that no discussions regarding block deals have occurred.

To align management interests with investor outcomes, Kakao announced plans to link executive compensation and incentives to stock performance and shareholder value. The company also detailed its shareholder return policies, including a planned 300 billion won share buyback and cancellation program. KakaoX intends to use 30% of subsidiary dividends and investment gains for shareholder returns, while KakaoAI plans to utilize 20% to 35% of its adjusted free cash flow for similar purposes.

Despite these strategic moves, analysts note short-term headwinds. Korea Investment & Securities lowered its target price for Kakao from 60,000 won to 53,000 won, citing expected weakness in third-quarter operating profits due to sluggish performance in advertising, commerce, and fintech sectors. However, the firm maintained a ‘buy’ rating, suggesting that the long-term value of the spin-off, particularly the growth potential of KakaoAI, remains a significant driver for the stock.