Original Plan for 'Purinau' Acquisition Rejected by Kakao Two-Review Committee
Kakao Mobility's acquisition of 'Free Now,' Europe's number one taxi platform, has hit a roadblock. The acquisition plan has been indefinitely delayed after Kakao's Investment Review Committee (IRC), the largest shareholder of Kakao Mobility, rejected the original acquisition proposal. This marks the first case where the founder and Management Innovation Chairman of Kakao, Kim Beom-su, who declared a reset of the expansion-focused management strategy, has put a halt to mergers and acquisitions (M&A) within its affiliates.
According to the IT industry on the 27th, Kakao Mobility is currently negotiating detailed terms related to the acquisition with Free Now. Both parties initially aimed to complete the acquisition negotiations within the year, but the plan has now fallen through.
Free Now is the largest taxi-hailing platform in Europe, operating in 170 cities across 11 countries including Germany, the United Kingdom, Spain, and Italy. It is reported to hold an 83% market share in the taxi-hailing market across Europe.
Kakao Mobility conducted due diligence for the acquisition of Free Now at the end of September. Last month, it submitted a preliminary bid proposal.
The acquisition process ran into difficulties due to opposition from Kakao's IRC. Kakao is the largest shareholder of Kakao Mobility, holding 57.3% of its shares. Any M&A by Kakao Mobility must undergo review by the IRC. After reviewing the Free Now acquisition proposal, the IRC rejected the original plan to acquire the entire business. Instead, it suggested pursuing acquisition only in specific countries or cities.
A Kakao Mobility official said, "We are currently coordinating opinions with the seller on detailed operational matters," adding, "It is not a breakdown at this point."
However, the industry interprets this as a de facto failure of the acquisition. If the acquisition scope is reduced, the acquisition price will decrease, requiring renegotiations with the seller. Major shareholders of Free Now include Mercedes-Benz and BMW Group. Since the company is not being sold due to financial difficulties but is seeking strategic investors who can create business synergies, there is no urgency in the acquisition process. Kakao Mobility reportedly submitted a new proposal to Free Now based on the IRC's opinions but received a negative response.
Kakao Mobility has been pursuing overseas expansion through M&A. Facing obstacles in the domestic taxi-hailing business due to market monopoly controversies, it is seeking new opportunities abroad. In March, it initiated its overseas expansion by acquiring the UK mobility brokerage platform 'Split.' Split connects demand with major global platforms such as Uber, Grab, Careem, Cabify, Trip.com, and Booking Holdings.
After entering the Free Now acquisition, the situation inside and outside Kakao rapidly changed. Judicial risks stemming from allegations of market manipulation involving SM Entertainment have spread throughout the Kakao Group, leading to thorough scrutiny of all M&A and investments. In particular, Chairman Kim has clearly stated his intention to abandon the expansion-focused management strategy and concentrate on technology and core businesses. While major decisions of affiliates had been left to autonomous management, he now plans to reconsider everything from scratch. Chairman Kim emphasized, "We will move away from a loose autonomous management approach and create a structure that strengthens centripetal force to accelerate towards a new Kakao," adding, "We will focus on solidifying our lacking fundamentals rather than numerical expansion and seek a direction that aligns with social trust."
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