Kakao to split into AI and platform units, boost KakaoAI net assets

Kakao said Thursday it will split into two companies, separating its KakaoTalk-based platform business into a new AI vehicle and adding 264 billion won ($197 million) to the spin-off's net assets, the company said in a regulatory filing.

The additional allocation raises the spin-off's net assets to 3.2 trillion won ($2.39 billion) from 2.9 trillion won ($2.16 billion) originally proposed, and shifts the split ratio to 0.611 to 0.388 from 0.635 to 0.364, according to the filing. The split will be carried out as a simple, person-based division, with a new entity provisionally named KakaoAI taking the platform business and Kakao X (provisional name) remaining as the surviving company.

Kakao's net assets before the split stood at 7.98 trillion won ($5.95 billion), against 2.91 trillion won ($2.17 billion) for the spin-off, the original figures showed. The company expects to receive dividends and other payments of 414 billion won ($308 million) related to the transaction.

"This split is a decision to transform Kakao into a structure of speed and responsibility suited to the AI era," Kakao CEO Chung Shin-a said, according to the company's website.

Kakao founder Kim Beom-su said the AI era demands a different order of agility, and that the two engines of KakaoAI and Kakao X would be used to redesign the company's growth structure so its results can reach shareholders and users.

Chung, the current Kakao CEO, has been nominated to lead KakaoAI, while Kim Do-young, head of Kakao Investment, will lead Kakao X. The split ratio was calculated as of June 30, with a shareholder confirmation date of Dec. 18.

Trading in Kakao shares is scheduled to be suspended starting Jan. 28 next year, with new shares slated to list on Feb. 25.

Kakao also plans to buy back and cancel 150 billion won ($112 million) of its own shares ahead of the split, starting Nov. 6, with the full amount purchased to be cancelled.