Kakao spin-off plan faces lingering investor distrust

Kakao's plan to split its business into two separate entities handling mobile messenger and investment businesses is facing skepticism from investors, following a more than 7 percent drop in the company's stock price. This decline wiped out 1.8 trillion won ($1.3 billion) from Kakao's market capitalization after the announcement on Friday.

The mobile platform giant assures that the restructuring will take place through a spin-off, distributing shares of the newly formed company to existing shareholders based on their current ownership percentages, aiming to protect shareholder value. However, investors remain doubtful as to whether dividing Kakao's businesses into multiple companies would improve corporate value, especially when the company's AI businesses have not yet met market expectations for profitability.

At a board meeting on Friday, Kakao approved the spin-off plan to create two separate companies – KakaoAI and KakaoX. The company plans to finalize the spinoff by January 1st of the following year and will relist KakaoAI on January 27th. KakaoAI will be a newly created entity.