Kakao approved a plan on Friday to split into KakaoAI and KakaoX, but investors remain distrustful and the stock fell more than 7 percent, wiping out 1.8 trillion won in market value. The company says the spin-off will distribute shares to existing shareholders and help the market reassess Kakao Group’s value. Analysts said the plan must deliver tangible AI results for the value improvement Kakao wants.
Kakao office in Seongnam, Gyeonggi Province, June 9. Yonhap
Kakao’s ambitious plan to split its business into two entities handling its mobile messenger and investment businesses, respectively, is facing lingering investor distrust, with its stock price falling more than 7 percent to wipe out 1.8 trillion won ($1.3 billion) of market cap following the announcement on Friday.
The mobile platform giant stressed that the restructuring will take the form of a spin-off, in which shares of the newly created company will be distributed to existing shareholders in proportion to their current stakes, so the measure is aimed at safeguarding shareholder value.
However, investors remain skeptical over whether spreading Kakao’s businesses across multiple companies would help enhance corporate value, particularly when its existing artificial intelligence (AI) businesses have yet to generate earnings meeting market expectations.
