Kakao Unveils Blueprint for Spin-Off, Labor Union Criticizes Small Shareholder Meeting Format
TECHWORLD ·
✦ AI Summary
Kakao cited faster decision-making for responding to the AI era and more efficient capital allocation by business segment as the background for its spin-off.
The newly established KakaoAI set an annual revenue target of KRW 6 trillion for 2030, while the surviving entity, KakaoX, set a consolidated revenue target of more than KRW 10 trillion.
Kakao also unveiled shareholder return measures, and its labor union criticized the meeting for lacking meaningful communication.
Kakao held an online meeting for small shareholders to explain the background behind its planned spin-off, which it announced last month, and its plans to enhance shareholder value. Kakao cited faster decision-making to respond to the AI era and more efficient capital allocation by business segment as the backdrop for the spin-off. It also outlined a plan to separate businesses with different characteristics and growth stages.
Through the spin-off, Kakao said it aims to create a structure in which each company can focus on its core business and have its business value evaluated separately in the market. After the spin-off, Kakao also disclosed medium- to long-term growth targets for KakaoAI and KakaoX.
The newly established KakaoAI plans to pursue the combination of KakaoTalk and AI, setting an annual revenue target of KRW 6 trillion for 2030. The surviving entity, KakaoX, set a target for average annual revenue growth in its main businesses at 13.3% and said its consolidated revenue target is more than KRW 10 trillion. Kakao also unveiled shareholder return measures.
However, Kakao's labor union said the answers to actual shareholder questions were insufficient at the online meeting for small shareholders. The union also criticized the format of the meeting and the level of communication.
The company disclosed its shareholder return measures and presented the basis for shareholder returns and return plans for KakaoAI and KakaoX, respectively. KakaoAI said it plans to use 20% to 35% of adjusted free cash flow, or FCF, as the basic source of shareholder returns. It also said that if FCF increases by more than 50% from the previous year, it plans to raise the return ratio to as much as 40%.
KakaoX said it plans to use 30% of dividends from subsidiaries as a source of shareholder returns, and also to use 30% of gains from investments after excluding capital costs and taxes. In addition, KakaoX reaffirmed a plan to buy back and cancel treasury shares worth KRW 300 billion using profits from the sale of Dunamu.
Kang Do-young, the nominee for CEO of KakaoX, explained that the purpose of the spin-off is to strengthen expertise by business division, improve decision-making efficiency, and allocate resources more efficiently across each company. He said the goal is to maximize corporate value and ultimately enhance shareholder value.
In response, the Kakao branch of the Korean Chemical and Textile Food Industry Workers' Union criticized the meeting on the same day. The union argued that the meeting amounted to little more than a repetition of the company's existing position rather than meaningful communication, and said explanations were lacking on the need for the spin-off, measures to protect shareholder value after the split, and measures to protect labor conditions.
The Kakao branch said the question-and-answer session was run in a company-led manner, with limited reflection of actual shareholder questions. According to the branch, 14 of the 16 questions used in the Q&A were prepared in advance by the company, and only 2 questions from shareholders attending on-site were answered. The actual time allotted for shareholder questions was about 6 minutes.
Accordingly, the Kakao branch demanded that the company disclose all shareholder questions submitted to the meeting and provide written answers to those that were not addressed. It also argued that an additional public meeting with management, including CEO Jeong Shin-a, was necessary.
An Se-jin, vice head of the Kakao branch, said it is difficult to persuade shareholders by selecting only the questions the company wants and ignoring uncomfortable ones. He also said that simply repeating existing answers makes it difficult to ease market distrust.
Kakao, meanwhile, said the meeting was a place to directly explain the company's changes and future direction to small shareholders. It said it will work to strengthen communication with shareholders and strive to secure a fair market valuation of the company.
Source: TECHWORLD · Kim Seung-gi
Original: https://www.epnc.co.kr/news/articleView.html?idxno=407103
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Source: TECHWORLD
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