Kakao to split into KakaoAI and KakaoX in major restructuring

Kakao has resolved to undergo a corporate spin-off to restructure its governance, dividing the company into two entities: KakaoAI and KakaoX. Under this spin-off structure, existing shareholders will receive shares in both new companies according to a ratio of 0.36 for KakaoAI and 0.64 for KakaoX.

KakaoAI is designed as an AI core company focusing on AI, advertising, and commerce centered around the KakaoTalk messenger. KakaoX will serve as the surviving entity, managing tech-fin, content, and mobility businesses, including Kakao Bank, Kakao Pay, and Kakao Mobility, alongside new investment functions.

The company stated the move aims to enable independent management and faster decision-making as business complexity increases. Kakao also highlighted a significant valuation gap, noting that its potential group value is estimated at 34.2 trillion won, while its recent average market capitalization has been approximately 16.8 trillion won.

To address shareholder concerns, Kakao announced various return plans. KakaoAI intends to use 20% to 35% of its adjusted free cash flow for shareholder returns between 2027 and 2029. KakaoX plans to use 30% of dividends from subsidiaries and 30% of investment gains for returns, alongside a 300 billion won share buyback and cancellation plan.

Market reaction was negative following the announcement, with Kakao's stock price falling 7.49% to close at 35,800 won. The company expects to complete the split by January 1, 2027, with re-listings scheduled for late January 2027.