Kakao Withdraws Mobility Sale... Win-Win Proposal 'Game Changer' Works

[Asia Economy Reporter Kang Nahum] Kakao has decided to halt the sale of its subsidiary Kakao Mobility. This comes 65 days after the initial sale rumors surfaced. It is evaluated that the proposal of a ‘win-win plan’ by Kakao Mobility CEO Ryu Geung-seon played a key role.

According to industry sources on the 18th, Kakao’s decision to stop the sale was largely influenced by the ‘Win-win Plan for the Sustainable Growth of Mobility and Society’ submitted by Kakao Mobility to the Community Alliance (CAC) the day before.

The win-win plan contains four agendas based on ‘Innovation and Growth, Cooperation and Sharing,’ aiming to fulfill social responsibility while achieving continuous growth and innovation.

The plan was CEO Ryu’s ‘last gambit’ to prevent the company’s sale. After Kakao announced it was considering selling a 10% stake in Kakao Mobility to the private equity fund MBK Partners, making them the second-largest shareholder, employee opposition at Kakao Mobility continued. Although Kakao’s management and the labor union held talks, their positions remained far apart.

Amid this, CEO Ryu requested the CAC to postpone the share sale and promised to create and submit a win-win plan. Kakao respected this and expressed acceptance.

Meanwhile, a shift in Kakao’s stance toward Kakao Mobility was also detected. In the ‘2022 First Half Corporate Group Report’ published on the 16th, Kakao Mobility was listed as a key affiliate in the ‘Digital Transformation for Everyday Innovation’ sector. This contrasted with the mention of seven companies under the ‘sectors currently undergoing or requiring liquidation procedures’ category.

Some interpret that the government’s regulatory easing movement also influenced the decision to halt the sale. Recently, due to a taxi supply shortage, the government is expected to relax mobility-related regulations, increasing the potential for business growth.

The exit strategy for major Kakao Mobility investors TPG and Carlyle remains a new challenge for Kakao. It is known that Kakao had an agreement with the TPG consortium, which invested in Kakao Mobility, to allow them to monetize their investment shares through an initial public offering (IPO) or similar within a certain period after the investment.

Last year, Kakao Mobility’s profitability was hindered amid controversies over encroaching on local businesses, and this year, the ongoing stock market downturn has made pursuing an IPO difficult. With the decision to withdraw the sale of Kakao Mobility, Kakao now faces the task of finding new ways to support investors’ exit strategies.